Cogges Manor Farm Museum, in Witney, Oxfordshire, had been losing money and faced temporary closure.
But county council bosses who took over its management from West Oxfordshire District Council in 2005 said they have had inquiries from potential investors.
They have been working with the Cogges Trust and will continue to pay the museum's £250,000 subsidy for 2008-9, a spokesman said on Tuesday.
The local authority's cabinet will make its recommendations - including the museum's funding situation - for the budget on 15 January.
However, the plan is for the cash to be reduced over the following three years with investment from outside sources gradually coming in, added the local authority spokesman.
"Never at any stage did that mean we were all fired up to close the museum"
The facility, built around an old farmhouse, currently offers "living history" lessons to schoolchildren.
Councillor Jim Couchman, the county council's cabinet member for social and community services, said: "From the very start there seems to have been a desire to paint this whole scenario in black and white terms.
"Yes, we wanted the £250,000 annual budget shortfall at Cogges out in the open and discussed fully so that it could be tackled.
"However, never at any stage did that mean we were all fired up to close the museum.
"Any suggestion to the contrary will be very strongly challenged.
"The additional rumours about selling the museum for housing were also absolute rubbish from the very start and I wish people would stop repeating this nonsense.
"As a listed Ancient Monument [by English Heritage] it is almost inconceivable that planning permission for residential development would ever be granted."
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