The buildings lie in a World Heritage area, a designation shared by the Pyramids and the Taj Mahal, and include Hastie's Close, Chambers Street, and South Bridge. The internal structures of the world-renowned Edinburgh Festival venue The Gilded Balloon and the La Belle Angele and Loca nightclubs collapsed in the fire. Early assessments suggest Cowgate, site of the seven storey Leisureland, and South Bridge are so badly damaged they will have to be demolished. The University of Edinburgh was also among the affected as the fire spread through the School of Informatics building and the university is now seeking temporary accommodation.

City council leader Donald Anderson said the fire had "left a gaping wound in the heart of the city" and called it the "most devastating in living memory". Demolition teams are expected to move in today. Some of the buildings will be removed brick by brick as will some historic facades. A council spokesperson said: "Where things can be saved, that will be done. If anything is going to be saved it will be bits of facade rather than the internal works," a council spokesman said.

But Colin Amery, the UK Director of the World Monuments Fund (WMF) which registers and preserves old buildings, said the global significance of Edinburgh's Old Town and its status as a UNESCO World Heritage Site could not be over-emphasised and he called for caution before any demolition work was undertaken.

He said: "We are deeply concerned about the damage this devastating fire has done to Edinburgh's medieval Old Town." Amery added: "We hope there will be no premature demolition, once the fires are put out, and WMF will be monitoring closely the quality of the restoration work. Now is a good time to remember that Edinburgh's historic centre is always at risk from other threats, such as unsympathetic development."