The gym at Liberton High School in Edinburgh, where 12-year-old Keane Wallis Bennett was crushed in April when a separating wall fell on her, was due to be pulled down during the summer holidays but the work has been delayed as the investigation into the tragedy continues.
The Scottish Government will pay up to £1.6 million towards the cost of a new £2.5m PE facility, due to be completed next year.
Work on demolishing the existing gym hall will start as soon as investigations by the Health and Safety Executive are completed.
In the meantime a classroom has been altered costing £150,000 to provide a temporary dance studio.Plans for a memorial are also under way.
Gillian Tee, director of children's services, said in a report to the council: "It had been the intention to demolish this extension during the recent summer break.
"However, as the investigation into the circumstances of the tragedy is still continuing, demolition work has not yet been progressed.
"We intend to move forward with this as soon as the ongoing investigations are completed."
Paul Godzik, education convener, said: "We are very grateful to the Scottish Government for agreeing to provide a financial contribution towards the cost of providing replacement PE facilities at Liberton High School.
"The overwhelming view from everyone connected to the school was that the existing gym should be demolished as soon as possible."
Minister for Learning Alasdair Allan said: "I am pleased the Scottish Government is able to make a financial contribution to the City of Edinburgh Council to replace the gym facilities.
"We remain ready to offer support to the council and families affected by the tragedy."