Victorian Planning Minister Matthew Guy has exhausted all avenues of appeal against the $300 million redevelopment of Melbourne's historic Hotel Windsor.

Heritage Victoria has issued a permit to allow the developer, Halim Group, to replace some interior sections of the 130-year-old building, including concrete floors in place of existing timber flooring.

But the developer has been refused permission to significantly change the layout of the hotel's heritage suites and the permit prevents any impact on the historic stairwells or the grand ballroom.

Mr Guy says he disagrees with the scale of the redevelopment but he cannot do anything to stop it.

He says what we are now seeing is the slow death of the Windsor.

"It is such a shame that it is now going through a process of having the interior ripped out of it," Mr Guy said.

A 27-storey high rise tower will be built behind the hotel.

"That is a permit that should never have been issued," Mr Guy said.

"It is a scar on Melbourne that forever will remind Melburnians of Labor's failures in planning."

The developer, Adi Halim, says not everyone is opposed to the project.

"I think we have loyal supporters of the Windsor and they have kept coming back," he said.

"We have great support from all of the supporters and Melbourne have been supportive.

"The design industry, the hotel industry and the tourism industry have been very supportive of the project."

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