Sheffield Council has not yet signed the 12-month Central Library exclusivity deal with Chinese developer Sichuan Guodong, The Star can reveal.
The council said it expected the agreement, which would enable the firm to explore the possibility of turning the Grade II-listed building into a five star hotel, to be finalised 'imminently'.
But the news has angered campaigners trying to fight the proposal and keep the library service in the Surrey Street building.
They say it was widely thought that the deal had been signed when first announced in November, and the uncertainty has stopped people coming forward with alternative proposals for the library building.
The council signed a 60-year investment partnership with Sichuan Guodong in June last year.
Nick Smilie, a member of Sheffield Central Library Action Group, said there had been a lack of transparency, and by 'very strongly' implying the library was subject to an exclusivity deal already, the council had caused confusion.
"A lot of people in this city feel passionately that the library is a key asset and at the very least any process to take that away from us has to be done openly and transparently," he added.
In a letter to council leader Julie Dore, the group said the confusion meant people had been put off trying to list the library as an asset of community value, or ACV, meaning the community would have six months to put together a bid in the event of a sale.
And they said the uncertainty had given Sichuan Guodong a 'de facto' exclusivity period without signing an agreement, effectively denying any other interest.
But cabinet member for libraries Jack Scott said there had been no other interest apart from Sichuan Guodong due to the huge cost of restoring the building. The council estimates a full repair and refurbishment would cost £30 million.
And Coun Scott said campaigners were welcome to submit an ACV application, which the authority would have to consider regardless of any exclusivity agreement.
He said the nature of the deal, crossing language and cultural barriers, meant it had taken a while to be drawn up, adding: "We are listening as a council.
"We understand that many campaigners are anxious about the options we are exploring.
"We haven't made any decisions other than to talk with the investor.
"We will make sure people have got plenty of opportunities to engage."
Coun Scott promised in November there would 'always' be a city centre library service.
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