Council bosses in Lichfield could give up control of Chasewater in a deal being drawn up behind closed doors.
The secret proposals would see ownership and management of the reservoir and dam transferred from the district council to Staffordshire County Council, which already owns the Chasewater Innovation Centre.
Discussions are still at an early stage, but if the deal goes through it would mean taxpayers across the county would share the bill for upkeep of the dam, which is currently undergoing urgent repair work estimated to cost £4.5 million.
At present the district council must meet the costs.
Bosses have been desperately trying to find partners to share the bill, but had not previously indicated a full handover was being considered.
The transfer proposals - which are outlined in confidential council documents - were inadvertently revealed at the district council's annual meeting.
Opposition councillors questioned the merits of such a deal, and insisted it should be publicly debated before any decision is taken.
Liberal Democrat councillor Ian Jackson told the meeting: "I certainly welcome the fact that attempts are being made to obtain assistance from other bodies and I trust we will all be kept full informed of the progress.
"But I am a little disturbed by an item which indicates the county council has indicated they may consider taking over ownership and management.
"I would be very interested to know precisely what's going on."
But he was quickly silenced, with members opting to discuss the matter behind closed doors.
Councillor Jackson refused to reveal any further details to the Express & Star.
But he said:"There are major decisions to be taken over Chasewater that need to be debated in the public realm."