A community theatre in the heart of an estate faces closure – despite promises it would be saved.

The Precinct Theatre has been thriving on the Packington Estate, off Prebend Street, Islington, for the past 10 years – and is credited with helping keep children off the streets.

The estate is being demolished, but Islington Council and developer Hyde Housing both pledged to secure a new home for the theatre, which counts the likes of EastEnders star Tiana Benjamin among its graduates.

But now manager Reima Baker, 58, has been told she will not be found new premises or given any compensation.

She said: “People say if it wasn’t for the Precinct, they would be in jail now.

“Hyde promised to help find me somewhere else and give me some money – but now they have changed their mind. The council also promised to keep the theatre when the redevelopment started, but they should have made sure.

“We’re going to have to close because I have nowhere else to go.”

The Precinct, which is funded through donations from community groups such as the Cripplegate Foundation in Central Street, Finsbury, runs acting workshops and dance classes for four to 18-year-olds.

Ms Baker will now be allowed to stay until her lease runs out in August 2013 – while the estate is knocked down around her – and has been offered time slots at a new community centre to run classes, but she insists the theatre needs its own space.

Jimmy Dill, 42, of St John Street, Finsbury, whose three children James, 13, and twin daughters Ally and Drew, nine, attend the theatre, said: “It will be a tragedy if it disappears. I’m scared to tell my kids it might close – they would be devastated. There isn’t much for people on that estate, it’s like a beacon of light.”

A Hyde spokeswoman said: “The timescale for our construction programme has changed, which means Ms Baker is now able to stay until the end of her lease. She was always aware that her lease would not be renewed, and she is not entitled to a new lease or to any compensation. Hyde has provided her with a number of relocation options, which she has declined.”