Darlington 1883 FC have reached an agreement with Darlington RFC to discuss plans for a potential ground-share - bringing the football club back to its hometown.
The Quakers have been sharing Heritage Park in Bishop Auckland for the past two seasons after financial difficulties forced the club to leave the Northern Echo Arena.
However, the club has now signed a memorandum of understanding with Darlington RFC to enter official negotiations regarding the possibility of sharing Blackwell Meadows.
Darlington Mowden Park rugby team have completed a deal to buy the town's former football stadium.
The Quakers left their 25 thousand seater ground earlier this year after severe financial problems saw them relegated to the Northern League.
The rugby club hopes to start using the Arena early next year.
Darlington Football club now plays it's home matches in Bishop Auckland.
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The Chairman of DFC 1883 Ltd, Dennis Pinegar, says the FA's decision to place the club in the Northern League is not what the interim board wanted.
Following a hearing at Wembley Stadium this morning the FA dismissed an appeal against the decision on all counts.
The club will now be playing in level 5 of the football pyramid next season and not be allowed to play under the name Darlington FC.
I know there is nothing else that could have been done in order to get the result of the appeal changed, the FA have decided that we are to be viewed as a new club and as much as we can challenge that and argue the case we have to now accept that.
There has been a lot of uncertainty around this club in recent times, and the fans deserve better. It's our job now to work with the fans, get the fans to back the club and get the club back playing in Darlington - at the highest level we can, as soon as we can.
Darlington FC 1883 Ltd have lost their appeal against their relegation to the Northern League.
Darlington FC 1883 Ltd have been told by the FA that their appeal against the FA decision to class Darlington FC as a "new club" and to place the club at level 5 of the football pyramid will be heard on the 21st June 2012.
We have to be confident when we go down as we put forward a strong appeal, but we are taking nothing for granted. We will be well prepared and hope to come back with a positive and fair result.
Darlington FC have lodged an appeal against the decision to relegate the club four divisions.
The Quakers were relegated to the Northern League Division One on the recommendation of the Football Association after going into administration last season.
The club were recently taken over by the group Darlington FC 1883 Limited, and classed as a 'new club' as debts remained with the existing holding company and not the new company.
The FA said the Northern League Division One was the highest league they could be placed in.
Darlington FC 1883 argue that it is not a new club, and say they submitted their appeal last Friday afternoon.
Chairman Denis Pinnegar said:
"The amount of positive support we have had for this appeal has been a great boost, we have to be hopeful that it will be successful."
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Watch Kenny Toal's full report here on ITV News Online.
The possibility of a Company Voluntary Agreement will be discussed next week. A CVA is a proposal telling creditors what they can expect to get back. It's claimed the success depends on former owner Raj Singh waiving the £800,000 he is owed.
Darlington 1883 was formed as a limited company. This was against the advice of the national body Supporters Direct, which suggested the club be run as a community club with profits ploughed back into it; as many other clubs have done. We speak to people in Darlington for their reaction.