Waltham Forest council has said it is "excited" at the prospect of new ownership for the Grade II-listed former EMD cinema.
The authority is set to approve funds for the compulsory purchase of the building in Hoe Street, Walthamstow, next month.
The venue, which has been empty since 2002, is currently owned by the Universal Church of the Kingdom of God (UCKG), which has failed to get permission to turn it into a place of worship.
Negotiations are said to be ongoing over a sale, but funds for a CPO could be approved on July 15.
If the CPO is imposed the council plans to sell the building to Waltham Forest Cinema Trust and Soho Theatre, which has developed a plan to restore the cinema as an arts and entertainment venue.
Cllr Clare Coghill, cabinet member for economic growth and high streets, said: "We’re really excited by the prospect of bringing the EMD back into use as an arts and entertainment venue and we know that our residents want this too.
"The venue will help develop the borough’s cultural offer and help put Waltham Forest on the map for visitors near and further afield.
"On 15 July, Cabinet will be asked to agree to provide funding, subject to a number of conditions, to the Soho Theatre Company to help them purchase and restore the building.
"The grant is intended to help assist a negotiated purchase of the building from UCKG and if this is not possible, the Council can look to progress to a CPO in accordance with the 1990 Town and Country Planning Act and subject to Cabinet approval."
A spokeswoman for the council added a CPO is still "on the table", but a negotiated sale if possible, will be "quicker and more cost effective."
In May 2013, the church's appeal against the council's decision to reject its bid to turn it into a place of worship was rejected by the government's planning inspectorate.
Campaign group The McGuffin Film Society has been pivotal in the campaign to return the venue to community use.
Spokesman Bill Hodgson described the up-and-coming cabinet meeting as a "significant development" and says the council is "more than justified in pursuing a CPO."
He added: "Local residents have made their voices heard time and again on this issue and there can be no doubt that a revived entertainment venue is what this community wants."
A UCKG spokeswoman said: "The UCKG HelpCentre is considering this step and is not yet ready to comment on this development."