The archdiocese's decision to sell the church, one of the first to be built by Tipperary architect James Keely, has sparked a bitter dispute with local residents, who say it is being demolished for solely financial reasons.

"St Brigid's is situated on the Lower East Side, in what is now known as East Village, " said Ed Torres of the Committee to Save St Brigid's.

"This area contains the hottest pieces of property right now, with apartments going for $1,000 a square foot.

The church site itself is worth around $25m ( 21m). That is the main motivation behind this demolition, nothing else."

St Brigid's was closed in 2001 because of structural damage and local residents immediately set up a restoration fund. They spent three years fundraising and by 2004 had close to $103,000 when the archdiocese announced its decision to demolish the historical landmark.

A US Supreme Court ruling on 31 January dismissed a complaint made by the committee contesting the New York archdiocese's plans to demolish the church. An appeal has been lodged by the campaigners and will be heard in June.

"This is a 159-year-old church and there is nothing else quite like it in New York, " said Torres, who has been a member of the parish for three decades. "For years, this was a slum neighbourhood and a poor parish that needed the help of the archdiocese.

"They never gave it, and then they strung us along for three years before they said they were knocking it down.

They would never talk to us, or negotiate. That's why we had to initiate a lawsuit."

The archdiocese has claimed it knew nothing of the plans to restore the church, and the former parish priest of St Brigid's had to be called in to sign an affidavit recounting the monthly meetings he had with archdiocese accountants to discuss the money raised.

A spokesman for the archdiocese said it will be returning church restoration donations to anyone who can prove they gave money, but it is estimated that around $30,000 was given in cash and is therefore untraceable.

"It's horrendous, the way we have been treated, " said Torres. "They have been very, very difficult to deal with and we are left with a lot of unanswered questions. But it's not over yet. The appeal is coming up in June and we are still fighting the good fight."