The Grade II*-listed building has been placed on English Heritage's 'at risk' register, and discussions are currently taking place over how it can be regenerated.
The council is backing a scheme put forward by the Piccadilly Partnership which includes developers Argent and Liverpool- and London-based architect Austin Smith:Lord, which would see the building renovated and converted into a new music and leisure venue.
However, the building's owner, Britannia Hotels, has repeatedly rejected such proposals in favour of its own scheme - a new hotel, with office space for the company as well as a fire station museum.
The building has been described as a 'rotting hulk' by developers, and the council is eager to see the building restored to fit in with the surrounding regeneration of the Piccadilly area.
The council has even threatened Britannia Hotels with a compulsory purchase order if an agreement over the building's future cannot be reached, and the council claims it has been unable to visit the site and assess the full extent of the building's state.
Manchester Council chief executive Howard Bernstein said in a statement: 'The fire station is a fine landmark with a crucial role to play in the ongoing regeneration of the area. We believe Piccadilly Partnership's proposals for a mixed-use events and music venue have significant potential and welcome the positive dialogue between the partnership and the building's owner Britannia Hotels to explore the idea.
In the meantime, we are pressing for work to prevent the Grade II*-listed building deteriorating to be carried out as soon as possible,' he added.