The Royal Dublin Hotel is to undertake the €8 million restoration of the last surviving Georgian townhouse on Upper O'Connell Street which it will eventually lease or dispose of as an office complex or corporate headquarters.

To make it suitable for modern office requirements, Number 42 will be separated from the hotel - it's ground floor has been in use as part of the hotel foyer - and a glazed link to its rear will connect it to a third generation office block which, remarkably, will encase another historic protected building, O'Connell Hall.

Built in the mid 18th century, the four-storey over basement townhouse is the last surviving example, on what was originally a residential street, of the original Sackville Mall Mansion.

All of the other houses where either destroyed during the 1916 Rising or demolished in the 1960s, some to make way for the purpose-built Royal Dublin Hotel. The Fitzwilliam Group, which acquired the Royal Dublin in the early 1990s, has also secured planning permission from Dublin City Council for a €14 million revamp of the hotel which will get a new facade, the existing one being regarded as somewhat of an eyesore.

The group purchased the adjoining Aer Lingus ticket office two years ago for an estimated €1.9 million and Number 71 Parnell Square will be razed and replaced by a four-storey bedroom wing and ground floor retail unit. Another 24-bedroom wing over the hotel will front Moore Street and the fifth floor will be extended to give seven bedrooms.

It is envisaged the townhouse will principally act as a grand reception area for the office complex with board rooms and some office space and an assortment of buildings to the rear will be demolished to make way for a courtyard and a link to the 18,000 sq m (193,750 sq ft) five-storey block fronting Moore Lane.

The futuristic building will have a glass tube lift overlooking the courtyard. O'Connell Hall will be visible through the transparent skin of the building and will be enclosed in a double height floor.

It is believed the ornate Victorian assembly hall featuring gilded capitals was built by either the Irish Farmers Club or the Catholic Commercial Club somewhere between 1860 and 1880. The Fitzwilliam group has appointed agents Richard Ellis Gunne and Finnegan Menton to handle the sale/letting of the building. Number 42, which seems to have had nine lives, was reputedly hit by three shells during the 1916 Rising, was occupied during the civil war and went on to survive the 1960s cull. In recent years it has been languishing "in a state of advanced disrepair" according to a planning report.

Richard McLoughlin of Blackwood Associates conservation architects, who is involved in the project designed by Ashlin Coleman Heelan architects, says the lower floors of the townhouse are the most architecturally interesting. Designed by eminent 18th century architect Richard Castle, the high ceilings of the first floor salon are similar to those of houses on Henrietta Street and it features magnificent stucco work by Robert West, who worked on Leinster House, Carton House and Powerscourt House.

As it stands, the plasterwork on the first floor has been overpainted in a profusion of greens and gilts and will be painted white to highlight its fine detail. "For the moment, emergency work to the roof is keeping water out and the upper floors have in effect protected the lower ones," says McLoughlin.

The townhouse will have complete independence from the hotel which will allow it to be appreciated in its full glory, says Albert Noonan, project architect of Ashlin Coleman Heelan. In recent decades it has been entered from the hotel "which means you don't experience the full impact. You were never meant to enter those rooms from the side."

The original grand staircase will be restored and extended to the basement where a nightclub was partially-built some years ago which will be removed. The restoration of the townhouse and upgrading of the hotel will form an important part of the rejuvenation of Upper O'Connell Street, where the redevelopment of the nearby Carlton Hotel has experienced a series of delays.