The Auckland Regional Council has voted unanimously to keep one of the historic Queens Wharf sheds alongside the Government's temporary structure that has been dubbed "the slug".

The ARC this afternoon endorsed the redevelopment of Shed 10 as a permanent cruise ship terminal on Queens Wharf, alongside the Government's temporary plastic shelter for a fan zone during the 2011 Rugby World Cup.

The Council had previously backed plans to demolish both historic cargo sheds, but has since consulted with the Historic Places Trust and decided to keep one of the sheds on site. It is proposing to demolish the second shed and move it to another site.

According to the Council agenda, the total cost of retaining and renovating Shed 10 would be over $17 million while the Government's plans for the temporary structure would be $9.6m. There is an additional cost of $9.8m for landscaping the wharf.

The Council agenda does not include a total cost for retaining Shed 10 and the temporary structure and building would need to start within two weeks if it is to be completed before the kick off of the Rugby World Cup next year.

Importantly, the Government - a co-owner of the wharf - has not given its blessing for the plan.

Rugby World Cup Minister Murray McCully said he was frustrated with the ARC for going back to the idea of keeping one of the sheds.

"If the ARC wishes to take steps to move the sheds in order to protect any heritage value until such time as the new Waterfront Development Agency takes over, I have made it clear that I am open to that.

"In saying that, I absolutely insist that nothing will put at risk the provision of suitable facilities on Queens Wharf, at reasonable cost and on time, to support a world-class Rugby World Cup event in New Zealand next year," Mr McCully said.

Mr McCully sent a letter to ARC chairman Mike Lee yesterday and made it clear that the Government remained committed to the temporary structure.

"We see no merit in the redevelopment of Shed 10 on its current site, as we agree with your earlier assertion that it is 'old and cheap and nasty'," Mr McCully wrote.

He went on to say that he was disappointed in the ARC for changing their position.

Mr McCully then delivered an ultimatum: Either redevelop Shed 10 off-site, or buy the Government's interest in the wharf.

After the council's extraordinary meeting, Mr Lee told the media that the two parties were at an impasse but he was confident an agreement could be hammered out.

Asked about Mr McCully's ultimatum, Mr Lee said it could look "a bit churlish".

"Like picking up the ball and going home because Auckland is not doing what it has been told," Mr Lee said.

He said the ARC could buy the Government's share of the wharf but the situation was complicated.

"If there is going to be a fall guy, if the Government doesn't want to be seen to change, then let me be that guy," Mr Lee said.

Earlier this morning ARC councillor Joel Cayford described the new Shed 10 design as looking very similar to the design which won a competition held by the Council last October.

He said the process had been "a tangled route" and pointed out that the Council had changed tack on more than one occasion.

Mr Cayford also questioned how the Council would combine "a plastic slug with a shed".

Mr Lee accused Mr Cayford of scoring points with members of the public and media present.

"Yes, it has been a tangled route but that seems to be the Auckland way," Mr Lee said.

He said despite that, the Regional Council does achieve its objectives.

The Council has yet to secure agreement from the Government as co-owner of the wharf for the move, and will also need the blessing of the Auckland Transition Agency because of the extra funding required to pull off the Shed 10 restoration.

Last year, the Government and the ARC paid $20 million each to buy Queens Wharf from Ports of Auckland and became joint partners in the development.

Despite being shut out of the development, the Auckland City Council has put $24 million aside to restore the sheds. In the past few days, Mr Lee has met Auckland Mayor Banks to discuss Queens Wharf. Auckland City is taking a "wait-and-see" approach to today's meeting.

Mr Banks has since issued a statement saying his position on Queens Wharf and the retention of the historic sheds has not changed.

Mr Banks said the decision is in the hands of the Government and the ARC and he would make no further comment.