Scottish Ballet has attracted widespread condemnation from the visual arts world after revealing it is applying for lottery cash to convert Tramway 2 - an internationally respected exhibition space which launched the careers of artists such as Roderick Buchanan and Christine Borland - into rehearsal space.

In a statement, the company said it was "working in close co-operation with Glasgow City Council and the Scottish Arts Council to finalise an agreement".

Yesterday, Glasgow City Council tried to defuse the row, saying suggestions that a decision had been made were "wide of the mark".

A spokesman said: "Any decision on the future of the Tramway will require a political decision by councillors. No such decision would be in the pipeline until Scottish Ballet had confirmation of funding. People are saying, ‘why haven’t we been consulted?’ It’s because there isn’t a proposal yet."

However, the council’s culture and leisure services department has already sent a briefing to staff at Tramway that "the presence of Scottish Ballet in the building would enrich the arts programme".

While the briefing says the council is considering a "range of options" for the building, the only one mentioned is Scottish Ballet’s. Asked why this might be, the council’s spokesman could say only that it was a "good question".

Professor Seona Reid, the director of Glasgow School of Art, who is leading the protest against the plan, said yesterday: "I don’t think there’s any question they’ve already made the decision. If the lottery awards Scottish Ballet the money then my understanding from talking to the city council is that it is a done deal.

"That goes completely against the city council’s own visual arts strategy, published in 2001, which talks about Tramway being part of a network of galleries that would support artists."

Opened in 1990, Tramway later had a £3.5 million refurbishment, but its arts programme has since been scaled down. Prof Reid said its loss as a visual art space would be a major blow. "It’s a unique space in Scotland, and manages to attract to Glasgow international artists who just won’t come to any of the other venues we have.

"It’s also been the centre of this extraordinary flowering of Scottish artists. Glasgow is now seen as a major European visual arts city. Tramway has been at the centre of that. That’s why everybody is up in arms about it. It’s irreplaceable."

Yesterday, Prof Reid met Chris Barron of Scottish Opera, which runs Scottish Ballet, to try to persuade him of the "devastating effect" the plan would have. She would not discuss the details of the meeting, but, asked if it had been successful or constructive, simply said "no."

Scottish Ballet refused to comment further. However, a leading Scottish artist, who asked not to be named, told The Scotsman: "Scottish Ballet should think very carefully before turning a vast swathe of the arts community against them. Why is a national arts organisation getting involved in disenfranchising another area of the arts?

"You also have to look at the internal politics, of what the hell senior management at culture and leisure services think they’re doing."