Mayor Joe Anderson is planning to launch a social enterprise to secure the future of St Luke's Church at the top of Bold Street in Liverpool city centre after rejecting a "non-solicited approach" for the site from a private sector developer.
The mayor is hoping to create a Community Interest Company to raise funds to secure the future of the landmark building, owned by the council.
St Luke's Church was built in 1831 by John Foster and John Foster Jr. It was severely damaged by air raids in 1941 and was maintained in its current "bombed out" state as an art space and cultural venue.
Developer Signature Living had proposed turning the building into a hotel and wedding venue but Anderson said he has rejected the idea.
Anderson said: "I have been clear that it was never my intention to sell St Luke's Church – it is a building which is extremely important to me personally and I would never do anything to jeopardise its legacy or status.
"We have now decided not to proceed with the proposals to develop a scheme inside the site. They were visionary and could have been economically viable, but I believe they don't represent what I or the public would want.
"Conversations have also taken place with Urban Strawberry Lunch who currently put on events within the grounds of the building. They were constructive, but they don't at this time provide the security and future that the site requires. However, they have carried out some fantastic work at the site over the last few years and I am keen that they play a key role in the discussions and debate about the future of St Luke's.
"The site requires a significant amount spending on it to secure the safety of the structure, so we have also had some very early positive discussions with the Arts Council about the possibility of applying for funding.
"I believe that setting up a CIC is our best option and will give us the opportunity to work with as many people as possible who all have the interests of St Luke's at heart."
A public forum is to take place to engage different residents and groups in the city to develop a plan to secure the building. A date is to be announced shortly.