The asbestos-riddled old Morwell Power Station and briquette factory has been granted heritage listing.

The former Energy Brix Power Station on the outskirts of the Latrobe Valley town of Morwell closed in 2014 and has sat idle since.

The Heritage Council of Victoria has now listed the site for protection.

Cheryl Wragg, a local resident who lodged the protection nomination and said it was a special site.

“It's the oldest coal-fired power station in the state, it's the rarest in terms of engineering, it's the only remnant of Victoria's briquetting industry and it demonstrates the State Electricity Commission of Victoria, which changed the course of Victoria's history,” she told the ABC.

The site contains up to 15,000 cubic metres of class A and B asbestos.

Asbestos Council of Victoria chief Vicky Hamilton wants the buildings demolished, not protected.

“It's a danger. The whole place is a toxic dump and it needs to be pulled down,” Ms Hamilton said.

The surrounding area already has a high rate of mesothelioma and asbestos-related diseases.

“It's an insult to see it standing there. It's a reminder of the pain and suffering the workers have already been through,” she said.

Energy Brix Australia Corporation, the final operator of the site, went into liquidation in 2014.

“We only wanted to demolish the power station which is the building that contains the majority of the asbestos,” Energy Brix remediation general manager Barry Dungey has told reporters.

The administrators were quoted $60-80 million to make the site safe, while demolition would cost about $25 million.

“My personal opinion is it's a failure of common sense,” he said.

“The only person that can stop this now is the Victorian Planning Minister.”

The Minister says he is considering the heritage report and any options for intervention.