The charred remains of the Childers backpackers' hostel will be bulldozed next month to make way for a memorial to its 15 victims.
A new hostel, art gallery and tourist information centre will also be built on the block in the small town 300km north of Brisbane.
The site has not changed
in the 19 months since a fatal fire swept through the building.
"It's just a black stain in the middle of the streets, which is not good for the town, the public or for families [of victims] coming back," said Isis Shire Council president Bill Trevor.
The 4m by 2m memorial is to be made of frosted blue glass and will feature a photograph of each victim. Behind each picture will be layers of up to 20 more photographs of their family and friends.
The man accused of starting the fire, Robert Paul Long, faces trial in Brisbane this month.