St John's College owns St Margaret's Institute, in Polstead Road, and has agreed to sell the 999-year lease for £400,000 to the management company* running the institute.
At the north area committee, councillors agreed to grant £25,000 towards the cost of the lease, and a further £30,000 towards the cost of renovating the building.
They said the institute was so important to the people of Oxford that the council's executive board should match the committee's contribution towards the cost of the lease.
Alan Armitage, city councillor for Summertown, said there was so much uncertainty about projects to renovate other community facilities in the area that the St Margaret's Institute was a "beacon of light", providing a valuable service which needed to be recognised and supported.
Ben Simpson, who runs the management committee, said he was delighted that councillors had pledged funding.
He added: "With the support of the city council we have been able to convince St John's College that we serve a wide part of the community and are not just an insignificant church hall".
"There are 2,500 houses within our immediate catchment area and we welcome users and groups from adjoining wards and further afield."
Once the SMI management committee owns the lease it will be able to carry out long- term renovation plans.
The community centre, which is the city's oldest, dating back to 1889, is the base for a wide range of activities, ranging from a day centre for the elderly to an under-fives play group.
