Ministers have written to Liverpool City Council in response to a request from SAVE Britain's Heritage's to use an obscure legal power to make the Council sell the 440 Victorian houses in the Welsh Streets area rather than demolish them.
The Council had intended to give final agreement to the plan, part of a housing market renewal pathfinder, this month.
But opposition to the planned demolition despite enforced clearance of most residents of the houses, which include Ringo Starr's birthplace, has been strong.
In December, SAVE requested ministers to use their powers under the Local Government, Planning and Land Act 1980 to issue a Public Request to Order Disposal which allows people to ask ministers to force public bodies to dispose of underused or unused land.
"Before a single bulldozer rumbles along Madryn Street I want to ensure that every option has been considered," said housing minister Grant Shapps.
"In particular I want local community groups to have the opportunity to put forward viable proposals to preserve this historic house. This gives an opportunity to look at imaginative reuse of terraced housing - which has proved popular and successful elsewhere."
He said the request demonstrated the strength of local feeling and he wanted to see if an alternative community-led solution was possible.
But the Council reacted angrily, claiming it had consulted residents and an overwhelming majority supported them.
"Residents have been fully involved in developing these proposals and have shown they want decent homes to replace houses which have long passed their life span," it said.
The proposal to demolish more than 300 of the homes came from the New Heartlands Housing Market Renewal Pathfinder, part of an initiative by the former Labour government which included extensive demolition of terraced houses in northern cities to try to push up house prices.
But SAVE says the poor condition of the homes is due to the HMR process and the Merseyside Civic Society said the Council does not have the money to replace them, while local people are queuing to return to the area.
