Cardinia Shire Council is set to announce the fate of the kindergarten today, after a "miraculous" confidential settlement during mediation talks between representatives of the council and Cockatoo residents last Friday.

The residents and the council had been at loggerheads over the council's decision to demolish the kindergarten.

Last week, the council rejected a residents' bid for a state government heritage grant to restore the kindergarten, which sheltered 300 people as Ash Wednesday bushfires razed the town and killed 27 people in the region in 1983.

Mayor George Blenkhorn, council chief executive officer Garry McQuillan and residents Dot Griffin, Leticia Wilmot and Graham Simpson attended last Friday's meeting.

Residents were bound by an undertaking of confidentiality not to reveal the agreement - which was to be voted on by councillors last night - but were upbeat after the meeting.

In a statement, Ms Wilmot wrote that the council had given a commitment that residents would be advised before any more demolition work went ahead.

"We do trust them to keep their word. Which is great news. No more standing in the pouring rain and no more getting up at 6am and standing in the half-light freezing cold," she wrote.

Cr Blenkhorn said the participants had had "a very good meeting" but declined to give more details. .

Reverend Peter Crawford, of St Luke's Cockatoo church, who initiated and co-chaired the mediation, said there was a "miraculous" transformation during the talks.

"Once you get divisions and fractures in the community, it's very, very hard to work things out. It was a genuine reconciliation process.

"Everybody who was at the meeting on Friday showed a great deal of goodwill and graciousness. I was very proud of them."

Mr Crawford said he hoped the meeting would point the way to "good communication" in the future.

Cockatoo township committee president Owen Deppeler said the lesson was the need for better communication, regardless of last night's outcome.

He said the section-86 township committee, which is constrained from publicly criticising the council, was best replaced by a more independent committee.

"When the council was not listening to us, there were not a lot of options to get it sorted out."

Will the kindergarten be saved? Find out the latest at caseyweeklyberwick.com.au