The campaign to save Ancoats Dispensary, a splendid listed red-brick building that is threatened with demolition, is continuing with a petition organised by heritage campaigners.

The derelict dispensary has long been part of the industrial fabric of Manchester and was immortalised on canvas by LS Lowry. Campaigners from HistoryME want to save the building and use it as “a platform for education and training.” A petition has attracted more than 500 signatures of support and they are raising funds to save it.

It was built in the late 19th century to treat patients who didn’t qualify for poor law hospitals, but who couldn’t afford medical bills. The dispensary is the only remaining building on the site and its Grade 2 listed required permission to be demolished.

Developers Urban Splash wants to demolish the building after exhausting all other possibilities. The dispensary is in a poor state and would require up to £3m to bring it up to modern standards, according to the company.

But campaigners launched on an online petition to save it that is supported by the Victorian Society. A Facebook group has also been launched.

The Northwest Development Agency had planned to put money in to save the building’s fabric, but it fell by the wayside after the NWDA was scrapped by the government.

Heritage Works, a charity which specialises in finding new ways to preserve old buildings, carried out a study to see if it could find interest in the building.

However, despite a number of organisations coming forward, the cost of maintaining the dispensary has ultimately deterred them.

LS Lowry famously painted it in 1952 in his work Ancoats Hospital Outpatients’ Hall. The painting remained in the city and is now at the Whitworth art gallery.

Chris Costelloe, conservation adviser for the Victorian Society, said: “Ancoats Dispensary must be saved. This last remaining fragment of Ancoats’ heritage is an impressive survivor in an area that has already lost most of its historic buildings. It must not become the victim of short-term economic concerns.”

Urban Splash says over the last three years it has looked at a variety of options, including conversion to apartments, conversion to offices and even conversion into an art gallery. It has invested more than £1 million in the building. Unfortunately the wider economic conditions have meant that none of these options has been commercially viable.

The developers said they were aware of the petition “and in many ways we are sympathetic.” The company said it is only in this situation as a result of the offer and subsequent withdrawal of RDA funding midway through restoration work.

“It is with great reluctance that we have reached this point with the Dispensary,” it said. It describes the situation as “something that is outside of our control and contrary to our usual approach to saving buildings.”

It says the building is in a precarious state and the walls would collapse without the temporary scaffold system for support. The company has held talks with the Greater Manchester Building Preservation Trust – a subsidiary of the Heritage Trust for the north west – but was unable to find a solution.

The building has also been on the market and has been extensively advertised, but there has been no credible interest from any party who could take on and save the Dispensary.

Yet, campaigners remain convinced the building can be saved, despite developer Urban Splash’s assertion that it is too costly and in a poor state.

A public meeting will be held in Manchester on 23 July with MP Tony Lloyd in which the campaigners’ plans will be outlined.