The Plaza cinema, the only large screen serving Camden Town, has won a stay of execution from the threat of closure.

Built on the site of a former dairy, and dating back to 1890, the 340-seat Plaza is one of London's oldest cinemas. It has built up a solid reputation as an art house.

Its 20-year lease had been due to expire on September 29, and its managers, Artificial Eye, could not afford a higher rent. It pays around pounds 30,000 to property company Bernard Sunley, part of the Lonrho group, which also owns the Parkway cinema, closed last August.

Supporters of the Plaza and Parkway, who have collected 20,000 names on a petition to save the cinemas, have waged a protracted war against proposals for the site, believing these would include demolition.

Andy Engel, director of Artificial Eye, who as part of the deal has been prevented from discussing figures, said: 'I am not happy that I'm overpaying. However, we are protecting the facility of the cinema.'

The cinemas are among buildings near Camden Town Tube station which Sunley hopes to sell for several million pounds. In 1992, plans to build a seven-storey shops and offices complex were rejected by Camden council on the grounds that the site would be overdeveloped. An appeal was dismissed last year.

The council is drafting a planning brief which should be ready next month. Retaining the cinemas will be a top priority, but a spokesman said: 'Our powers are limited to the planning regulations.'

However, if the two cinemas are retained, the site would become less desirable to prospective buyers, and be more suited to refurbishment. The only way to build would be upwards, and the Government inspector imposed a height ruling in last year's appeal.

Chris Shaw, director of the Shaw Corporation, agents for the site, refused to divulge the new rent, but said: 'We have written to the agents of Artificial Eye proposing that they take on a new lease for a year at a concessionary rent. This will give them occupancy while the future of the building is being considered.'