The future of the William Morris Gallery looks more uncertain than ever after Waltham Forest Borough Council in east London revealed that it is in talks with the De Morgan Foundation about the establishment of a national museum devoted to the arts and crafts movement?

Councillor Geraldine Reardon said the De Morgan Foundation had approached the curator of the William Morris Gallery with the idea of creating a national museum based on collections on loan from the De Morgan Centre and William Morris Gallery.

"This is an exciting proposal that we are considering carefully," said Reardon. "The bottom line is that any project would have to safeguard our collection and significantly enhance the William Morris Gallery."

But there are fears that the gallery will be closed if the collections are loaned to the new museum, after a recent reduction in staffing levels and opening hours at the William Morris Gallery.

At a meeting of the Friends of the William Morris Gallery last month, Kate Catleugh, the managing director of the De Morgan Centre, proposed a new arts and crafts museum at the Beaufoy Institute in Lambeth. The De Morgan Centre is looking for a new home after council cuts in Wandsworth mean it will no longer be able to afford to stay in its present venue.

But Martin Stutchfield, chairman of the Friends, said the reaction at the meeting had been "unfavourable".

"The Friends are deeply unhappy about the way the borough has handled this," he said. "If the borough pursues the arts and crafts museum idea, it will weaken its proposed Heritage Lottery Fund application for improvements to the gallery."

Background to William Morris Gallery saga

January 2007: Waltham Forest borough council unveils plans to restrict opening hours and reduce staff numbers at the William Morris Gallery and Vestry House Museum.

March and May: Protests against reduced opening hours and job losses. A petition against the cuts is signed by 10,000 people.

October: A national arts and crafts museum is proposed at a meeting of the Friends of the William Morris Gallery.