A council-run nursery in Wisbech, which has previously been threatened with closure, will undergo an expansion before being taken over by a school.

A report, due before Cambridgeshire County Council’s children and young people committee on Tuesday, recommends Oasis Day Nursery should continue to be governed by the council until Orchards Church of England Primary School is “in a position to take on these responsibilities”.

To meet increasing demand for childcare provision in the Waterlees area, the capacity of the nursery will be increased on-site from this month.

In September, a satellite nursery will open in a spare classroom at Orchards Church of England School.

This will complement the school’s own nursery class, but continue to be run by the Oasis Day Nursery manager and governed by the council.

Adrian Loades, executive director: children, families and adults services, said: “The proposal is for Orchards Church of England School to take on governance of the nursery at some point in the future, depending on the school’s leadership and management capacity and Ofsted outcomes.

“Subject to the number of children and families taking up places, capital investment may be required by July 2018 to provide the nursery with replacement accommodation on the school site.”

When Oasis Day Nursery opened in 2005, it had a capacity of 50 children aged 0-4 and was governed by the Wisbech Community Development Trust.

The council took over running the nursery on June 1 2006.

The nursery was the subject of a review into its future in September 2011 because it was not operating at full capacity.

Between 2008 and 2010, the average annual cost to the Oasis Children’s Centre budget of subsidising the nursery was £150,000, but had been as high as £184,000.

Efforts have been made to improve the nursery’s reputation and reduce costs.

This financial year, the nursery, which received a “good” Ofsted in 2013, is expected to “break-even”.

Mr Loades said: “It is anticipated that the continued popularity of the nursery, coupled with high demand for early years and childcare in the local catchment area, mean that it will break-even this financial year 2014-15 without any subsidy.”

A Wisbech Community Development Trust spokesman said: “The Wisbech Community Development Trust did have the original designation for the Oasis Nursery but Cambridgeshire County Council retained the revenue funding initially given for the day to day running of the nursery.

“These funds were not transferred to the trust and therefore it was agreed that the council would take over responsibility of running the nursery on June 1 2006.

“Any problems incurred since that time have been the responsibility of the council and nothing to do with the trust, as indicated in this report.”