Campaigners desperate to save a library will be offered the chance to run the service themselves on a hugely reduced budget.

The fight to save Upper Norwood Library, formerly run jointly by Lambeth and Croydon Councils has gone on for more than two years, but in papers released today, it has been revealed Croydon are prepared to offer £75,000 a year to keep the service open.

This is more than £100,000 less than the £187,000 the council currently pays towards running the library.

Earlier this year Lambeth Council promised to pay £170,000 towards the service, also a reduction on what was previously allocated.

Bryher Scudamore, a prominent member of the campaign group Save Upper Norwood Library, said: “The group is quite an interesting one and if Croydon Council tried to walk away without paying a penny we would have given them hell.

“To be honest my initial reaction this is good in parts. It is terrific if Croydon Council will support the library and help the community form a trust but it will only work if they can offer the appropriate funding.”

The Upper Norwood Library has been run for 112 years by a committee formed of Croydon and Lambeth councils.

In 2010 Lambeth councillors boycotted the AGM after complaints Croydon had appointed non-Upper Norwood ward members. After a second AGM was missed in 2011, Croydon Council announced the agreement had been terminated, sparking fears about the services’ future.

Cllr Tim Pollard, cabinet member for children families and learning said: “The message back from the community was overwhelmingly that they wish to have a library service in the area. We did not think it would be fair to ask people to travel to South Norwood, Thornton Heath or into neighbouring boroughs for their library service.”

He said analysis on other branch libraries showed services cost between £110,000 and £265,000 a year depending on the size, and the funding from Croydon and Lambeth would match this.

He said: “What we want for the library is for them to run a good service. We believe this is achievable on this budget. We also don’t think it is fair if you are from another part of Croydon if we were to treat Upper Norwood specially and offer disproportionate funding.”

The proposals will go to a Cabinet meeting on September 17 and Croydon Council is set to negotiate the proposals with Lambeth council.

Cllr Pollard said it was hoped the building could be passed to the community group on a long term lease at a peppercorn rent.

He said the aim was to have the new set up in place by the end of the financial year and the offer of £75,000 a year would last for the following two years.