The Catholic Archdiocese of Melbourne will appeal to VCAT after Yarra Council rejected its application to demolish the heritage-listed St Joseph's Church in Collingwood, reports the Melbourne Times Weekly.
The archdiocese wanted to replace the building, destroyed by fire in 2007, with a playground for neighbouring St Joseph's Primary School.
Parish priest Father Peter Varengo said he was disappointed by the council's decision, adding that there was a shortage of playgrounds in the area.
''The parish and school have worked very hard, since the fire destroyed the church, to develop a strategy for the site to ensure the best long-term outcome,'' Fr Varengo said.
The council's planning department rejected the application late last month on the grounds a playground would be inappropriate and compromise ''the significance of the heritage place''.
The church was built in 1861 and had become popular with the local Vietnamese community before it was all but destroyed by a fire.
Only the facade remains.
Save St Jo's spokeswoman Mary Fenelon said supporters would fight the VCAT appeal.