THE owner of Newcastle's deteriorating former post office building has been told to secure the site or face possible legal action from Newcastle City Council.

The council has issued the written warning following a complaint from Cr Keith Parsons after he recently saw a man climb a wall on the building's Bolton Street side and enter an open door.

The Herald revealed late last month that squatters had penetrated the historic building.

Sydney-based developer Sean Ngu has plans to turn it into a nightspot, but the site has remained vacant since the previous federal government sold it in 2002, and is now covered with weeds, graffiti, and has broken windows and doors.

Mr Ngu and the building's Newcastle representative, Deane Moore, said yesterday they knew nothing about the council's letter.

Mr Moore said the building had been secured several times, and would be again, but it was difficult to stop people breaking in.

"We've already organised someone to fix it," Mr Moore said.

"It has been secured several times. Those vandals keep smashing it and breaking in.

"We're trying to secure it again."

A council memo said a June 3 inspection of the premises "revealed unimpeded access to the building" and "evidence of unauthorised persons accessing the internal structure".

A letter was sent to the owner asking for the building to be secured and advising that the council would be back in 14 days to inspect, the memo said.

Lord Mayor John Tate said yesterday the warning, if not heeded, could prompt the council to pursue legal action in the Land and Environment Court.

"We want to work with this guy and get it [the building] open. That's the best option now," Cr Tate said.

"But if he's going to sit around and not get on with it, council's got no option but to go to court."