The 17-year-old Civic Library could be moved as part of a redevelopment of the Canberra Theatre precinct in an effort to boost the number of visitors and position it closer to shops, parking and public transport.
City Services Minister Chris Steel said the current location "does suffer from some challenges", but a decision had yet to be taken on the future of the library.
Mr Steel agreed there should be a library presence in Canberra's city centre.
"There are opportunities, I think, through looking at a better location, a better fit-out and better programming within the library, to encourage more people to use it," Mr Steel said in Legislative Assembly question time on Thursday.
"The current location does suffer from some challenges. It is not directly in the centre of the CBD. It is further away from where people are parking and going to shop and do other activities. It can be inconvenient to get to and actually hard to find."
Mr Steel said despite the Civic Library being one of the territory library service's newest buildings, it did not mean it had been designed in the best way.
"The demographics certainly play a role. Woden is our best patronised library, down my way. I think that is largely to do with, quite frankly, having the oldest population in Canberra in that area. The library provides great children's programs as well. Belconnen also benefits from that, but Belconnen also has its challenges of not being directly in the centre of the retail precinct," he said in response to questions from the Greens.
"We are looking at all of our libraries and what opportunities there are to try to attract more people in. Civic is where there is the biggest opportunity, because of the challenges that are presented here. We will be considering all of those issues before we make a decision about its future."
Mr Steel in 2018 said there were no plans to close libraries, in response to an inquiry into the territory's library system.
The $14 million purpose-built Civic Library opened in December 2006, described at the time by then chief minister Jon Stanhope as the "best in Australia".
"It is a fantastic new library and a great investment in library facilities within Canberra," Mr Stanhope said at the library's opening.
"It is state-of-the-art and ... it has all the facilities that someone could expect of a library in this century."
The library space is leased from the Cultural Facilities Corporation, a territory-owned entity which operates the Canberra Theatre Centre.
"We also know that significant planning work has been undertaken in relation to the future development of a new theatre and precinct. Transport Canberra and City Services and Libraries ACT have been working closely with Major Projects Canberra as they have gone through that planning process," Mr Steel said.
