The offices currently used by NHS Orkney are to provide a base for Voluntary Action Orkney following the opening of the new hospital in Kirkwall.
After health board staff based at Garden House move to the hospital, the Council-owned building will be redeveloped for use by VAO and a number of third sector organisations.
This has been agreed in place of an earlier plan to extend the Kirkwall Travel Centre as a new base for VAO.
OIC Depute Leader Leslie Manson said: “The voluntary sector plays a vital role in maintaining a strong and caring community in Orkney and it has long been our ambition to provide modern, fit-for-purpose accommodation that will support the work of VAO.
“This is a cost-effective alternative to the original plan – refurbishing Garden House will cost considerably less than an extension to the travel centre. That is an important consideration in the current financial climate and I am pleased that VAO have supported us in making this decision.
“I am pleased, too, that this important Council asset will be put to such good use after our colleagues from NHS Orkney move to the new hospital.”
Gail Anderson, Chief Executive of VAO, said: “Garden House will provide an excellent base for VAO and for the third sector partner organisations that share our current offices in Bridge Street.
“It will be an exciting new chapter for us all and we are grateful for the Council’s support. We are looking forward to moving to our new home once the refurbishment work has been carried out.”
The new hospital and healthcare facility is due to open in 2019.