City of Newcastle chief executive officer Jeremy Bath has given Newcastle Maritime Museum Society more time to decide what to do with its collection after issuing it with a seven-day ultimatum last week.
Mr Bath and museum committee president Bob Cook said on Tuesday that society members would have until after their annual general meeting on August 26 to choose whether to hand the collection to the council.
Mr Cook said the committee would present members with a range of options for the collection's future, from giving it to the council with no strings attached to investigating alternative means to store and display it.
The museum collection, formerly housed at Fort Scratchley then Honeysuckle's A Shed, has been in the council's care and in storage at a Carrington industrial site since May 2018, when the society folded with a six-figure debt.
Mr Bath issued a media statement nine days ago saying the museum society had "backflipped" on a public promise to donate its collection to Newcastle Museum and gave it a week to make good on this commitment.
The council will hand the collection back to the museum society, which has few options for storing and exhibiting it, if it does not agree to donate it to Newcastle Museum.
It is understood society members, some of whom have donated items to the museum, are concerned they will have no involvement in the collection if they give it to the council.
They are also worried Newcastle Museum will severely cull the number of maritime artefacts in the collection, estimated at 7500.
Mr Bath has told the museum society it is free to hang on to the collection if it does not trust Newcastle Museum, but it cannot impose conditions on any donation.
The council wants the collection on display in its Honeysuckle museum, but Mr Cook said last week that "a room in the museum is the wrong result for 47 years of maritime heritage collecting".
The society has proposed to the council a 10-year strategy to exhibit the artefacts in a maritime-themed redevelopment of Queens Wharf.
This proposal includes transferring the collection to the council with a list of conditions which maintain for members an "ongoing relationship" with the items.