An historic Adelaide hotel that had been facing demolition will remain a live music pub "forever more", with the state government promising to draft new laws it says will "save" not only the Crown and Anchor but other venues from development.

Under a deal reached with Singaporean development company Wee Hur, the state government will allow a high rise proposed for the Crown and Anchor site to be instead built nearby at a boosted height of up to 29 storeys — 10 more than previously planned.

While the pub's future has been secured, the government said the venue could be forced to close for up to two years while work is carried out on the development next door.

The historic hotel building, affectionately known as the Cranker, is a popular live music hotel located on Grenfell Street in Adelaide's east end.

It had been under threat from Wee Hur's application to the State Planning Commission to demolish all but the facade of the structure and construct a 19-storey student accommodation facility with a shop and café on the ground floor.

That proposal prompted protests, with the state government revealing at today's rally in Adelaide's CBD that it had intervened to protect the building.

South Australian Premier Peter Malinauskas told the gathering the government would make changes to planning laws to protect venues that host live music.

"The legislation that we are crafting isn't going to just save the building, it isn't just going to save the pub, it's also going to bestow upon the Crown and Anchor hotel, in that location, an unfettered right to play live music forever more," Mr Malinauskas told the rally.

"If you buy a building or if you buy a parcel of land and you want to develop it next to a pub that plays live music, well guess what? That pub will be able to continue to operate and play live music."

Mr Malinauskas said as part of the deal struck with Wee Hur, the government would grant the company an "expedited development process" to begin work on a 29-storey development, at a cost of a further $150 million, next door to the pub.

"[It] will simultaneously bestow upon Wee Hur Holdings the right for an accelerated development approval process to allow them to build a higher student accommodation facility immediately adjacent to the Crown and Anchor hotel," he said.

"We were never going to contemplate an option that would compromise further investment in our city from developers, who are building accommodation the state so desperately needs."

The bigger development would remain subject to approval, and would be assessed by the State Commission Assessment Panel within 10 days of an application being lodged, the government said.

Wee Hur general manager Peter Scott said it would be the company's third development in Adelaide.

"We are looking forward to providing a further $150 million in investment into the tertiary education system," he said.

"We've got an outcome [where] we can deliver both what our needs are and also the community needs."

Protecting 'the soul of our city'

One protester who attended the rally armed with a saxophone said he had one of his first gigs at the Crown and Anchor and had started writing a song about the effort to save the pub.

"There's so much history, so much history in the walls there. It's a spiritual place to play music," he said.

"It's the heritage of Adelaide, it's a part of Adelaide. History is in there, culture is in there, and that building is going to look amazing in 500 years."

Before the premier's announcement, the hotel's managing director Tom Skipper said saving the pub would set a "precedent" for other venues across Adelaide.

"Protecting this hotel is about more than just saving a piece of history. It's about future-proofing a cultural landmark for generations to come," he said.

"We cannot allow the soul of our city to be erased."

Greens say campaign highlights 'flaws' in planning laws

The Greens had been among the most vocal critics of the proposal, and have declared the reprieve a "huge win for people power".

Greens senator Sarah Hanson-Young said there was urgent need for investment in the grassroots arts sector.

"Community has lifted its voice. They've cranked it up for the Cranker and today we're starting to see the pressure working," she said.

"We've got to do more to save our arts community and invest in live music — we risk losing an entire generation of local musicians."

Greens MP Robert Simms said he would scrutinise the detail of the new legislation "to ensure it provides the right level of protection".

"Developers are going to really think again before they target Adelaide's iconic buildings in the future," he said.

"It demonstrates that pressure works."

Mr Simms said the case had exposed major shortcomings in heritage and planning laws, which he said were "stacked in favour of developers".

"We are delighted to hear that an act of parliament will be put on the table, but we'll be looking at the details to ensure it provides the level of protection that's required here," he said.

"This whole campaign I think has really demonstrated the flaws within our state's planning laws.

"Unless we change the law, we're going to see other iconic pubs and buildings in the firing line."