Parents were this week told that Westbourne House Day Nursery is to close next month after weeks of speculation over its future.
Staff and parents were originally told that the nursery would shut on August 30.
Owners CfBT Education Trust said the business had become “increasingly challenging to manage in the current commercial climate”.
Reading-based CfBT, who have owned the nursery since 2001, put Westbourne House on the market 18 months ago, but the nursery, based in a Grade 2 listed building in Cannon Hill, Westbourne Road, had had no serious interest from potential buyers.
A group of parents had set up a campaign group in a bid to save their children’s nursery from closure.
The group had support from local councillors and from Lancaster MP Eric Ollerenshaw.
They had explored a number of options including taking the nursery over as a parent co-operative at a cost of £500,000.
And they were given news that a potential buyer had been found for the property just weeks ago.
However, they were told this week that instead, the nursery will close at the end of September.
Joe Lowe, whose son Oliver attends the nursery, said: “On August 13 we received the devastating news that our beloved day nursery Westbourne House will now close at the end of September.
“This will displace dozens upon dozens of children, cost more than 20 nursery staff jobs and the knock-on effect to some parents who depend on this special place is incalculable.
“However, although we have lost the fight to save the nursery we intend to take CfBT’s incompetence much further and we are reporting them to the Charities Commission for a string of woeful failings.
“Please sign our petition at www.saveournursery.org.uk - it won’t stop the closure but we don’t have to remain silent!”
Carol Glover, head of UK contracts for CfBT Education Trust, said: “I know that this is unwelcome and upsetting news for the remaining parents at Westbourne House Day Nursery, staff and the consortium partners who were looking to purchase the nursery.
However, despite a significant and lengthy effort to consult with parents, staff and other interested parties on alternatives to closure we have been unable to secure a proposal which satisfies our obligations to obtain best value for the charity.
“Our trustees considered at length and in great detail the proposal presented by the consortium but agreed unanimously that closure of the nursery and sale of the property was the only option in the best interests of the wider charity.
“Now that we have been able to provide staff and parents with clarity over the future of the nursery our priority is to ensure that we support our staff and parents until the end of September.”