The authority wants to move council services into the library building with the library instead being based at Powysland Museum.
Powys County Council has been reviewing council accommodation over the last year. Rumours have circulated that staff from the Neuadd Maldwyn council building would be re-located to the library, so they could sell off the council building.
Councillor Rachel Powell, cabinet member for culture, said similar models had been successfully used in the county.
She said: "One of the models that we have adopted successfully is to co-locate our libraries into other buildings and with other services. We have done this with great success in a number of towns across the county including Builth Wells, Knighton, Llandrindod Wells and Llanidloes.
“Supplemented by the online library catalogue, which enables our residents to order books from anywhere in the county, and the e-books and other e-resources that are available 24/7 from home, this is transforming how people use libraries and the range of services that they are able to access in one location.
“However, we must continue to review all services and look at ways of making them cost-effective and sustainable. One option that we are currently exploring is co-locating Welshpool Library in Powysland Museum in the town. We will be engaging service users later this autumn about our proposal.”
Councillor Phyl Davies, cabinet member for assets, said the council buildings in Welshpool, which have housed council meetings in the past, would close as previously confirmed.
He added: "This review has been looking at buildings and office accommodation to assess their suitability for future service delivery.
“The review is also determining if the buildings are fit-for-purpose for both front office and back office functions and whether they support the council’s move towards an ‘agile’ working model.
“Cabinet has agreed to close Neuadd Maldwyn at the earliest opportunity subject to establishing a cost-effective alternative front line location in Welshpool. If an alternative is found, there would be an opportunity for somebody to develop Neuadd Maldwyn, which would benefit the council, the town and the county.”
Locals are unhappy about the possible move for the library and have began a petition against it.