The 1947 painting, entitled A River Bank, is due to go under the hammer at Christie's later this month, with a reserve price set at é500,000.
But if the painting is sold to help plug a é10m shortfall in the council budget, Bury Art Gallery could be de-registered by the Museums, Libraries and Archives Council.
And at a meeting of Bury council, it was revealed that de-registration could cost them between é20,000 and é25,000 in lost grants.
Coun Tim Chamberlain said that the financial loss would mainly affect the gallery's educational activities, not its exhibitions.
He said: "The service is looking for alternative external and partnership funding sources to maintain its education work.
"Of course, if the sale price of the Lowry is significantly larger than anticipated, members may have the opportunity to consider directing some of the income to supporting this work. The education programme will definitely continue, but possibly at a reduced level."
During the meeting, council leader Coun Wayne Campbell also faced accusations that the proceeds from the sale would be used to offset a shortfall of money for keeping services going at Ramsbottom Library.
Coun Campbell said that was not the primary reason for selling A River Bank.
But he said if it was sold for more than expected, the additional money would be used for the library.
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Angry McNasty, City Centre (03/11/2006 at 14:16)
Needs must, and all that!