St Cross, one of Oxford's oldest churches, is set to be taken over by Balliol College to house the college's historic collections.

After more than 800 years of Christian worship, it looks like St Cross is unlikely to continue as a full-time church after this Sunday.

Dwindling church attendances at the small church in Holywell are being blamed. On Sunday, a service of thanksgiving will be held at St Cross, conducted by Canon Brian Mountford, who is also the vicar of the University Church of St Mary the Virgin.

Church commissioners are still to respond to an application from the Oxford Diocese that would allow Balliol to go ahead with its plans. But they are expected to give approval in the winter.

Balliol plans to spend £3m to restore the building and transform it into an Historic Collections Centre, where the college's treasures will be put on public display But the building will remain consecrated and it is envisaged that occasional services will still be held in the chancel of the building, which dates from 1180.

A spokesman for the Oxford Diocese said the church had once been widely used by college servants. But shifting population in the city had led to falling congregations and the diocese had asked church commissioners to declare St Cross "partially redundant".

The Master of Balliol, Dr Andrew Graham, said: “St Cross Church is one of the oldest buildings in Oxford. Balliol is possibly the oldest college in the English-speaking world with archives to match — certainly the oldest on its original site.

"Bringing these together and combining them with state-of-the-art conservation facilities so that scholars from around the world will be able to consult Balliol’s archives and historic collections will represent a unique and long-lasting contribution both to heritage and to scholarship."

Balliol College recently announced that The Shirley Foundation has agreed, in principle, to contribute £1 million towards creating the collections centre.

Dr John Jones, a senior fellow at Balliol, said the church stood next to Holywell Manor, Balliol’s flourishing Graduate Centre.

He said the Balliol collection included 400 medieval manuscripts of international standing. It includes the library of William Gray, Bishop of Ely, described as the finest private collection from the Middle Ages. Balliol will acquire the building on a long term lease.

Tucked behind the church is one of the most impressive small cemeteries in England. The famous literary figures buried there include Wind in the Willows author Kenneth Grahame.