PUB chain Wetherspoon has admitted this week "it is minded" to close the Ship of Fools in West Croydon.
But spokesman Eddie Gershon said the London Road pub will remain open while negotiations with Sainsbury's over the lease of the building continue and this "could be for a number of months yet".
It is understood Wetherspoon is surrendering the lease.
Last week Wetherspoon refused to comment on the news that the pub, which has just been named pub of the year in the council's Best Bar None awards, was shutting, despite the fact Sainsbury's said contracts had been signed.
This week, Sainsbury's has been forging ahead with their proposals to convert the pub to a Local store.
The company has submitted an application to the council for a licence to serve alcohol at the store from 6am to midnight.
It has also applied to install a new shopfront on the building complete with cash machine, new signage and an air conditioning unit at the rear.
Sainsbury's does not need planning permission for the change of use from a pub to a shop.