It was said that Kwun Yum had been seen appearing near the huge rock (Lotus Rock) where the temple locates. The followers therefore built a temple near the rock to worship Kwun Yum. Though small in size, the temple is unique structurally. The front part of the temple stands on a terrace supported by pillars of 10-12 feet in height. The rear part lies on a huge rock which is now covered by the external wall. Part of the rock can be seen in the temple. Apart from its unique design, the temple also has fresco of dragons on the ceiling which is relating to the annual fire dragon dance show that takes place in Tai Hang. During Mid-Autumn Festival, eye-dotting of the fire dragon is carried out inside the temple before the dragon dance begins. Another unique sight of the temple is the hundreds of lotus lamps that are lighted in the chamber. Apart from Kwun Yum (Goddess of Mercy), the temple also houses Tai Sui (Sixty Gods of Time), Wai Tor (Buddhist Temple Guardian) and Choi Sun (God of Wealth). This temple was originally built in 1846. It assumed its present outlook in 1863 and was re-built by the Chinese Temples Committee in 1986.據稱觀音曾於此廟座落的巨石（後稱為蓮花石）上顯聖，善信因此建廟以資紀念。此廟的建築設計可說是獨一無二，頗具參觀價值。廟的前半部位於一個平台上，由高十至十二呎的支柱支撐；而廟的後半部則座落於一塊巨石上，惟現時該巨石為外牆所擋，僅可於廟內見到部分。此廟除設計特別外，廟內天花所刻的龍，亦有特殊的意義。因為每年中秋節期間於大坑舉行舞火龍活動時，火龍必先在蓮花宮內點睛。除此之外，蓮花宮的另一特色是廟內燃點了數百枝蓮花燈。除觀音外，此廟亦供奉太歲、韋陀及陰財神。此廟始建於1846年，現規模建於1863年，1986年由華人廟宇委員會重建。