A church which faced losing its home of 15 years has bought the premises after raising its bid to £500,000.

The New Testament Church of God was told to move out of St James Parish Hall in Cowley, Oxford, in March, when the Church of England, which owns the building, accepted a higher offer from the Salvation Army.

Its original bid was £20,000 below the Salvation Army's offer of £480,000 and the Diocese was bound by charity law to obtain the highest possible price.

The New Testament Church of God tried to increase its offer and threatened to march in protest at its treatment.

After the case was highlighted by the Oxford Mail, the Diocese of Oxford agreed to cancel the original sale of the building in Between Towns Road and re-open the bidding process.

Both the church and the Salvation Army were invited to submit a second closed bid, with a full, final offer and a deposit, automatically binding the highest bidder to a sale. The Diocese of Oxford accepted the higher bid of £500,000 but refused to reveal what the Salvation Army offered.

The Rev Dez Williams and his 130-strong congregation at the Church of God are delighted with the outcome.

He said maintaining his ministry in Cowley was worth the large mortgage taken out on the property and the enormous renovation and repair costs.

It is one of about 100 UK congregations of the New Testament Church of God, which interprets the Bible in modern terms.

Mr Williams said: "The Church of England recognised the original process was unfair and it was not conducted in a professional manner.

"We don't have to worry about looking for another building and the people fragmenting.

"The life of the church can continue in Cowley, close to where most of the Afro-Caribbean community live."

It plans to use the church hall for community projects as well as worshipping.

The Diocese of Oxford will hand the building over on June 6.

Work is due to begin on a new parish hall in New Beauchamp Lane in 2004 with proceeds from the sale.

Communications director, the Rev Richard Thomas, said: "This has been a difficult process.

"The Diocese has been pulled in several directions in attempting to meet the requirements of charity law and the needs of our Christian brothers and sisters in both the Salvation Army and the New Testament Church of God.

"However, we are pleased at the outcome and that this matter has now finally been settled by a fair and impartial process."

A Salvation Army spokesman said: "We are disappointed not to have obtained the Cowley parish hall.

"We regret the protracted period over which the sale has taken place."

He added the organisation would still leave its premises in Albion Place, St Ebbe's, Oxford, because it hax too many problems there with access for disabled people and a lack of parking.