A theatre founded by Sir Peter Hall will be offered “a new deal” including council money to ensure it stays open.
The Rose Theatre faced possible closure after Kingston council threatened to pull its funding but it will now “negotiate a new contract” when the current one ends next year.
Councillor Andreas Kirsch said it will take into account “financial challenges” and “place community values at its core”.
Sir Peter, who oversaw the National Theatre’s move to its South Bank home during his time in charge, was the founding artistic director of the Rose when it opened in 2008.
Its funding comes from ticket sales, sponsorship and financial support from the council and Kingston University.
Multi-million-pound plans have been unveiled to transform Grade II listed Greenwich Borough Halls into a theatre.
The former town hall will become home to a 650-seater main stage and a 240-seater studio.
