Councillors made the decision at their meeting on Tuesday night.

The TAFE has been using the building at 65-67 Templeton Street on a month-by-month basis.

But the councillors' vote will allow the shire to agree terms with the TAFE for up to five years.

"There is flexibility in that agreement," mayor Tony Cordy said.

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"But it's fantastic that there's an ongoing agreement with the TAFE, which is doing lots of great work in the community.

"So hopefully that continues."

Councillor Bill Maltby described the decision as a "very good outcome" for Castlemaine.

The council also voted on Tuesday night to knock back a permit application from a local podiatry business wanting to relocate to a property on Doveton Street in Castlemaine.

Shire staff had recommended councillors refuse to grant a permit.

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Councillor Christine Henderson was among those to vote to reject the application, citing concerns about the effect of allowing a business to set up in a historic residential area.

Cr Henderson described it as a "precious street" that needed protection.

Cr Cordy and councillor Matthew Driscoll voted against the motion, but the ultimate decision was to reject the application.

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