Manchester City Council (MCC) has announced that it will continue with plans for the restoration of Heaton Hall, Prestwich, despite failing in its bid to secure funding from the Heritage Lottery Fund (HLF).

The council plans to submit a revised, phased bid for funding early next year after the HLF said that it was unable to provide financial support for the £9.4m restoration of the Grade I-listed Heaton Hall, as well as the introduction of new educational programmes.

Work on the hall, which was designed by architect James Wyatt in 1772, is set to form the final part of a three-stage scheme to improve the Heaton Park site, with the first two phases completed in 2005.

Carole Souter, HLF chief executive, said: "We recognise how important Heaton Hall is to both Manchester's heritage and the local community and were impressed with the Council's initial plans to restore it and open it up more widely.

"However, this was a highly competitive round of decision-making and, sadly, we just didn't have enough money to support all the excellent applications we looked at on the day."

Mike Amesbury, MCC's executive member for culture and leisure, added: "We are very disappointed by this news because we worked closely with the Heritage Lottery Fund on previous improvements to the park and submitted a very strong bid for funding for this all-important final stage of restoration."

Four other historic buildings, including the Dower House and Temple, have already been restored, while other work included the reconstruction of a 4-mile (6.4km) park wall, the creation of new play areas and cafés, and a new, purpose-built Animal Centre.