More than 300 years after Nonsuch Palace was demolished to settle a gambling debt, the house that emerged near the ruins of Henry VIII's fairytale complex faces becoming another lost treasure.

The group that has run the Grade II-listed Nonsuch Mansion in Ewell for the past 70 years, expressed concerns this week that it is about to be sold to private developers.

Members of Nonsuch Joint Management Committee (JMC) lease the crenellated 1802 Gothic building to caterers or events companies. But last month their latest tendering proposal was refused.

Surrey County Council, which owns the freehold, has begun drafting a masterplan with "disposal of the mansion" and rebuilding the small museum in the Georgian service wing listed as objectives.

The council insisted it had intervened only because maintenance costs were outweighing revenue. Its proposals, a spokesman insisted, would ensure future generations could enjoy the mansion house - entrusted to the council for public enjoyment - and its 300 acres of parkland.

"We are hoping to remove all future financial liability and create a masterplan for financial recovery, taking the present financial burden off the Surrey taxpayer," she said.

The promise failed to appease Nonsuch JMC and Friends of Nonsuch, which accused the council of shaping the future of the park without committing to its running costs. Executive members have only agreed to contribute £95,000.

The switch has jeopardised the JMC's budget because banqueting - its main source of income - ceases at the end of January. Only the outside café will remain open.

MP for Sutton and Cheam Paul Burstow has written to the council demanding answers to questions about the future of the house and park.

Last Sunday, he was joined by a large group of local residents and park users plus Councillor Sean Brennan, leader of Sutton Council, to protest against plans.

He said: "Although Surrey County Council owns the park and Mansion, it has left Sutton and Epsom and Ewell Councils to maintain the property under a joint management arrangement. The county council has shown no interest in Nonsuch Park since the 1930s, and has made no contribution towards its upkeep.

"Out of the blue, they have come up with plans to dispose of the building without any consultation with the council or local people. This is high-handed at the very least, but their belated interest raises concerns about their intentions for the future, given their difficult financial situation."

Readers can attend a meeting about the future of the Mansion in the Ashcombe room at County Hall, Kingston, on February 27 from 2.30pm.