Melbourne's controversial floating nightclub given lifeline

Melbourne's controversial floating nightclub, ATET, has been given one last chance to remain open after council was bombarded with "an unprecedented number of complaints".

The City of Melbourne was considering terminating the venue's licence after the EPA found its noise levels were "unreasonable" in the residential area.

Lord Mayor Sally Capp said the venue would only be able to "use background music" until it could show compliance with the EPA noise level requirements.

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Capp hoped the "new proposition" would encourage the owners of ATET to "reconsider" their business model.

"We see other venues on water operate very successfully. We hope that we can find that sort of way forward with the operators of the ATET," she said.

"We want to keep supporting new businesses coming into the City of Melbourne and Docklands in particular, this was an opportunity to see that happen and it still could be that way."

It comes two weeks after the Lord Mayor announced the floating club had become "untenable" for residents living in Docklands.

ATET owner Jake Hughes told 9News he was blindsided by the council's decision to withdraw its support for the venue.

"We are compliant," Hughes said.

"We are operating in accordance with our planning permit and the EPA regulations."

In February, the 570-square-metre barge was partly destroyed by a fire, causing thousands of dollars in damage.

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