A neglected corner of National Park will become parkland after Newcastle council demolishes a fire-damaged building on the site.
Contractors are knocking down the former bowling club and Life Without Barriers building in Smith Street and the disused tennis clubhouse next door.
Lord mayor Nuatali Nelmes said on Tuesday that the two-hectare site was an "important space in the heart of the city".
"It should be preserved for recreation and open space, given it is going to be one of the larger spaces adjacent to what is the CBD area of the city," she said.
"The short-term will be to restore it to open space while there's community consultation around the future, but very clear that the future is open space and recreational."
The NSW Department of Education has eyed off at least part of the site to include in a proposed "Newcastle Education Precinct".
The government said last year that the precinct included a new public school and upgrading Newcastle High School. It has briefed the council on this proposal, but it has not indicated that the concept has progressed past the planning stage.
Newcastle MP Tim Crakanthorp said Labor would question Education Minister Sarah Mitchell and senior bureaucrats about the status of the project during budget estimates hearings on Wednesday.
The National Park land is zoned for public recreation, which precludes "education establishments".
Cr Nelmes said the department "may be able to fit their education needs on their own site at Newcastle High".
She did not rule out a school on the land, but only if there was no net loss of open space in National Park.
"But my first port of call for that site is to get it cleaned up so it can actually be used in the interim," she said.
The land, bordered by Smith, Parry and National Park streets, has been largely unused in recent years. The tennis courts on the site have been an eyesore since closing more than five years ago.
The Friends of National Park community group will hold a public forum on September 18 at Wal Young House to discuss the long-term future of the land.
The group is against a school on the site and is agitating to maintain it as a "breathing space in the increasingly high-rise west end of Newcastle's CBD".
Spokesperson Sue Outram said an adventure play area for older children, tennis wall, fitness circuit, community garden, shade trees and grass would be welcome.
"It's a beautiful site, and we need more open, green space," she said. "There's the opportunity there for active things such as a tennis wall, but not organised sport."