Open Dalston, which has been campaigning to save the building, won a stay of execution for the theatre in the High Court when a judge ruled that demolition should be postponed until the beginning of December.
He also ruled that a judicial review into the council's decision to grant planning permission should go ahead.
The theatre, which also hosted legendary gigs by the likes of Bob Marley in the 1970s, is believed to be the biggest and oldest of its kind in the world.
It is in an appalling state of disrepair and the source of the argument is whether structurally it is capable of being saved or whether, as the council argues, there is no option other than the wrecking ball.
If Arup Associates does finally win a go ahead, the scheme ( the four blocks in the foreground of the image) will involve the construction of a high-rise mixed-use development on the site, with 24 per cent affordable housing.
But Open Dalston founder, solicitor Bill Parry-Davies, is increasingly confident the scheme will fail.
'We are delighted with the outcome,' he said. 'We have been urging Hackney to halt the destruction of these buildings while the potential to reuse some or all of them is properly considered.
'Our heritage is irreplaceable and there are many imaginative schemes where the old has successfully combined with the new.
'It is obviously possible here too,' he added. 'We do not want to live in the past, but we do want to live with it.'
Hackney Council was unavailable for comment.