Thousands of books are set to move to Sunderland Museum and Winter Gardens by the end of the year, leaving the City Library building, in Fawcett Street, vacant.
Sunderland City Council has also confirmed that the renowned Northern Gallery for Contemporary Art is looking for a new home - rumoured to be in the National Glass Centre.
The authority says the decision comes down to government cuts, which has seen it axe nine libraries and warn that further closures cannot be ruled out.
Now Wearside’s Liberal Democrats have called into question proposals, which they say are being handled in internal discussions behind closed doors.
Coun Niall Hodson, for Millfield and Thornholme, said: “People are rightly alarmed by these plans.
"It is hard to see how the City Library and Museum wouldn’t suffer from being forced to share premises and losing so much space for books, computers, and exhibitions.
“The council explained away its recent closure of branch libraries in Sunderland as part of creating a hub library in the city centre, they also spent a small fortune refurbishing the Library and Arts Centre.
"That they are now talking about abandoning this building, packaging the Northern Gallery of Contemporary Art out to the Glass Centre, and the City Library into the Museum, makes a mockery of their plans.
“How can we be bidding for City of Culture whilst butchering our museums and libraries like this? It is baffling.”
Conservative Coun Robert Oliver said: "Given that the City Library has just been renovated, it is disappointing to hear that the Fawcett Street site may now close, leaving a hole in the main shopping street in the city which will likely be filled with just more council offices.
"Instead of blaming government cuts, the Labour council needs to admit that, during the years when there was plenty of funding, it failed to invest enough in libraries, spending tiny amounts on books and spending little on improving buildings.
"As a library user myself, I think that any move to the museum would have to take account of facilities already used there by different groups who may now be forced out and must have a proper plan for increasing lending of books."
Coun John Kelly, portfolio holder for public health, culture and wellness, said: “The council is looking to relocate the City Library to Sunderland Museum and Winter Gardens by the end of the year.
“Options are also under consideration for finding a new home for the Northern Gallery for Contemporary Art.
"This is part of the continuing rationalisation of council services and buildings resulting from unprecedented cuts to our budgets over the last six years, with at least a further £74m to find by 2019.
"We have to cut our cloth according to the funding we have available and this return to the library’s former home will go towards helping the City Council achieve some of those further efficiencies.
"But we also believe this will strengthen our cultural offer going forwards with the museum and library complementing each other. Working together will provide more opportunities for taking services out into communities and events as well as improved retail, catering and service provision.
"Future alternative uses for the City Library building are currently under consideration."