With the bulk of its books and storage space bursting at the building's seams, plans will now be made to start work on refurbishing what was formally the old Raymond Terrace police station.

Port Stephens Mayor Bob Westbury said he hoped the new 10,000 square metre complex would be fully operational by Christmas.

The Raymond Terrace Historical Society attached to the current site will also be relocated.

A $200,000 state government grant through the Country Libraries Fund Program will help fund the cost of the works, which Port Stephens council's property development coordinator Norm Barnes said will improve the library's overall functionality.

"There will be as much as three times more space providing additional storage, more functionality and greater access," he said.

Children's activity rooms and even an internal goods lift will be included. Raymond Terrace library manager Kris Abbott said the major benefit of this project will be to increase the library's range of services.

"It gives extra space for author events, children's reading programs and staff," she said.

The announcement came just days before a report into the sustainability of public library services went before Port Stephens council on Tuesday. It stated that the library's current condition is a "safety and business risk" and is "no longer a suitable building for public libraries in these times."

The same report also mentioned the council's significant savings strategy made from cuts to its public library services. Last financial year the council's libraries banked close to $275,000 as part of its ongoing sustainability review. These included cuts to a range of services including security patrols and operating hours. Port Stephens MP

Craig Baumann welcomed the re-location.

"The new premises will mean the council will be able to offer our community better services with more space for people, for collections and computers as well as designated area for children's activities," he said.