It was the hotel where Joan Crawford was discovered after winning 100 dance contests and Bing Crosby began his singing career.

But despite its glamorous history, the Ambassador Hotel in Los Angeles is remembered for a darker moment in America's history: the 1968 assassination of Robert Kennedy took place in the hotel's kitchen on the night he had claimed victory in California's Democratic presidential primary election.

That event presaged the decline of the Ambassador, a Hollywood landmark completed in 1921 that helped drive the westward expansion of Los Angeles. In 1989 the hotel finally closed its doors to visitors. Since then it has had an afterlife as a favourite location for film producers looking to reconstruct the glamour and opulence of Hollywood at its peak.

Now, after 15 years of uncertainty, bankruptcy and vitriol, not to mention a period under the ownership of property magnate Donald Trump, a new fate is planned for the Ambassador: it is to be converted into a school serving one of the most needy areas of Los Angeles.

The aim is for the $318m (£179m), 4,200-pupil school to relieve pressure in an area where 3,800 pupils have to take public transport to other areas because of a shortage of classroom places.

But not everyone is happy about the plan. "The school board is stealing from this city and it is murdering a piece of this city's history," said Mitzi March Mogul, president of the city's Art Deco Society. "They will push this thing through like a juggernaut, but once the Ambassador has gone it won't come back."

To appease conservationists, the education authority which owns the hotel has promised to create a replica of the hotel's facade along one of the city's busiest thoroughfares. It also plans to make use of one of the hotel's most famous features: the Cocoanut Grove nightclub - decorated with artificial palm trees from the set of The Son of the Sheik, starring Rudolph Valentino - will be restored to its original Moorish design and used as the school's main auditorium.

"This is a good compromise," LA schools superintendent Roy Romer said. "It tries to preserve historic aspects, but enables us to make a workable school community."

But parts of the hotel's history will be lost. Six bungalows, one of which hosted Albert Einstein (who complained about the room service) are to be demolished, along with the hotel's lobby.

Part of the Embassy ballroom, where Kennedy gave his final speech, will be retained. But the fate of the kitchen pantry where he was shot by Sirhan Sirhan is the subject of debate. A panel will consider the feasibility of a $2m preservation project.

"It's not a compromise," said Linda Dishman, executive director of the preservation group LA Conservancy. "Only one feature of the hotel is being preserved: the Cocoanut Grove."

The group says its views are not represented by the plan, which is due to be voted on at the end of the month.

The school district has been pig-headed," said Dishman. "It says it wants to build a replica of the facade to maintain the iconic view. Why maintain something you've just pulled down? The sleight of hand is apparent."

The stars, of course, did their best to destroy the hotel in its heyday. F Scott Fitzgerald and his wife Zelda set fire to their room then crept away unnoticed, leaving the bill unpaid.