Following the reduction in funding for the town's historic theater, Arts Council England (ACE) declared that it was "absolutely committed" to assisting performing arts in Oldham.
The Oldham Coliseum will close on March 31 after losing all of its funding from ACE.
Oldham Council has unveiled plans for a new £24 million theater despite the building's campaigners' best efforts to save it.
The plans for the new theater were "fully supported," according to ACE.
In opposition to the proposed closure, hundreds of activists showed up at a public meeting on Tuesday at Oldham Coliseum, including actress Maxine Peake.
The actor, who is originally from Bolton, praised regional theaters as the "lifeblood" of towns and led a chant of "hands off Oldham.".
A symbolic empty chair was set up on stage because ACE representatives were invited but declined to attend the meeting.
Following the funding reduction, the theater, which has a 135-year history, said it was unable to come up with a rescue plan and that it had begun a consultation period with all staff.
Oldham Coliseum was a "well-loved fixture," and "understandably many people have strong feelings" about its future, but it was too "high risk" for further investment, according to an ACE spokeswoman.
She stated in a statement that "Oldham Coliseum Ltd. has been facing financial and governance challenges for some time and that as guardians of public funds we could not invest in an organization which we assessed to be so a high risk.".
The building, according to her, belonged to Oldham Council and was "never part of our funding to the company.".
"ACE is absolutely committed to supporting arts and culture for the residents of Oldham, and we're standing by our commitment to invest £1.85 million in performing arts in the town. Overall, our investment in the arts in Oldham will be higher than ever before," she continued.
After funding expires on March 31, she stated that £360,000 in assistance would be given.
The existing structure had asbestos and a "litany of problems," according to Amanda Chadderton, the Labour leader of Oldham Council.
The council announced that plans for a new theater on Union Street with an auditorium seating between 300 and 350 people and a smaller 120-seat studio would be submitted in the summer.
On Monday, it will formally accept £1.08 million from the Arts Council for use in cultural initiatives in the borough over the following three years while it is being built.
ACE declared that it was "wholly behind the plans," which "will guarantee that there will be excellent theater in Oldham for people to enjoy for years to come."