The council had previously said the old building had numerous problems including asbestos, poor accessibility and cramped backstage and front-of-house facilities.
However, concerns were raised that the proposed new venue would be much smaller than the old Coliseum and therefore less financially viable, and would not have the facilities to stage full-scale shows.
The Coliseum launched the careers of numerous actors over the years, including a string of Coronation Street stars; Bernard Cribbins, who joined at the age of 14 in 1943; and Doctor Who companion Millie Gibson and House of the Dragon’s Olivia Cooke, who appeared there as members of Oldham Theatre Workshop.
An Arts Council England spokesperson said: “While the former Oldham Coliseum building belongs to Oldham Council, and isn’t funded by the Arts Council, we know what a well-loved landmark it is, and recognise its link to a strong history of theatre in the town, and the work the campaign group has been doing to preserve it.
“We welcome the ongoing work of partners in Oldham to develop a sustainable future for theatre and performance in the borough, and will continue to work with Oldham Council and partners to make sure there is a wide range of arts and theatre for audiences in Oldham to enjoy.”
