Eastbourne would be left with midwife-led maternity care
Councillors in Eastbourne are being asked to pledge £90,000 intended to benefit small community projects to the fight for the town's hospital.
NHS bosses plan to scale down maternity services at Eastbourne District General leaving it with midwife-led care only.
Campaigners want to seek a judicial review of the decision, but fear costs could be up to £150,000 if they lose.
Eastbourne council is to vote later on a motion from Councillor David Elkin to pledge the £90,000.
Mr Elkin said the cash was a new fund set aside to allow councillors to award about £3,300 each to community projects of their choice.
But at the moment there was no formal procedure in place to allocate it.
"I have no problem with there being a pot for small community projects," he said.
"But there does need to be a paper trail to justify where the money has gone.
"For this year, until we have got that sorted out, that money is going to sit in the bank."
East Sussex Downs and Weald and Hastings and Rother Primary Care Trusts made the decision to downgrade maternity services in Eastbourne last December.
The special care baby unit and inpatient gynaecology services will be based in Hastings, about 21 miles away.
Eastbourne Borough Council is one of a group of councils on the East Sussex Health Overview and Scrutiny Committee (HOSC) which opposes the changes.
In January, the HOSC voted to refer the decision to the government to be reviewed.
And the Save the DGH Campaign, which organised widespread public protests against the downgrading, now wants to apply for a judicial review.
"I am asking each individual councillor to pledge their share of the fund for this year to this good cause, which is for the health and economic wellbeing of the whole community," said Mr Elkin.
Chair of the campaign, Liz Walke, said it would welcome the pledge of cash from the council.