The Preston Down Trust has been given permission to put on hold its appeal to the charity tribunal because of the potential cost of the proceedings.
A statement this afternoon from the Charity Commission said that the trust, a Plymouth Brethren congregation that meets in Devon, approached it to ask for proceedings, due to start in March, to be put on hold.
The trust appealed to the charity tribunal after it was refused charitable status by the commission because the regulator was not satisfied that it had been established for the advancement of religion for public benefit.
The regulator said today that trust representatives told it the tribunal appeal process would incur significant legal costs and asked it to find an alternative.
The commission said its preferred method of settling whether the trust qualified as a religious charity was through the tribunal, because it would be dealt with "authoritatively and independently". But it said it had a responsibility to explore other options.
The proceedings will be put on hold while the trust and the commission explore those options. A spokesman for the judiciary said that the parties had been granted a three-month stay on the case after a case management hearing before a judge yesterday.
The commission said Dominic Grieve, the Attorney General, had signalled his support for a halt in proceedings. A spokesman for his office confirmed that Grieve would "prefer more dialogue to take place between the trust and the commission".
The commission statement said: "Our discussions with the Preston Down Trust will centre on their willingness to make those changes needed to ensure the trust is charitable and meets the public benefit requirement.
"Any application for registration put forward by the Exclusive Brethren must set out exclusively charitable purposes and explain how these will be advanced for the public benefit. The Attorney General, in his role as the guardian of charity, will also need to be satisfied."
The commission said it would consider issues of "harm and detriment" in its discussions and would not grant charitable status to the trust if it did not fulfil the legal requirements for registration.
If the trust fails to convince the commission, it will have the option of resuming its appeal. Representatives of the Preston Down Trust were not immediately available for comment.