The move would the strip the current proprietor, local woman Gerlinde Pommer, of her ownership of the historical building, the Interior Ministry said on Tuesday.
Adolf Hitler's family only rented an apartment within the Braunau am Inn house for a few years around 1889, when the future Nazi dictator was born. In 1938, after the Nazi regime annexed Austria and Hitler's close aide Martin Bormann bought the house, the site was placed under state protection. Austria returned the property to its original owners after the war. The River Inn in Braunau serves as the border between Germany and Austria.
In 1972, the Vienna government started renting the building, using it mostly to house workshops for the disabled. Its long-term fate, however, remained disputed. Although the government has been trying to buy the property since 1984, the owner Gerlinde Pommer refused to budge.
Minister pushing to 'tear down' the house
The Tuesday draft seems to signal that patience in Vienna has finally run out.
"The decision is necessary because the Republic would like to prevent this house from becoming a 'cult site' for neo-Nazis in any way, which it has been repeatedly in the past, when people gathered there to shout slogans," Interior Minister Wolfgang Sobotka said ahead of the cabinet meeting.
"It is my vision to tear down the house," he added, saying that its demolition would be "the cleanest solution."
Sobotka's ministry is currently paying 4,800 euros ($5,332) a month in rent, although the house has been empty since 2011, following another clash with the owner on its use and remodeling.
However, there are legal obstacles to destroying the house. The three-story building is protected by law as a part of the historical old town in Braunau, and the authorities would need to find a way around the regulation.
An interior ministry spokeswoman had already described Sobotka's remarks as his "personal opinion."
Compensation with no appeal
A twelve-member commission would make the final decision, with ideas ranging from demolition to conversion to a school, library, or a museum documenting the Nazi atrocities.
The parliament is expected to confirm the government's draft in September. The bill foresees a compensation for the owner, but the retired woman would not be able to appeal the decision nor to negotiate the damages.
Instead, Pommer would be paid a sum equivalent to those paid to compensate for railway line construction, according to Minister Sobotka.