The land at Heath Gardens in Walton was put up for sale by its previous private owner, sparking concerns about its future.
When residents heard it was up for auction, with a guide price of £10,000, they raised money through an online fundraising page so they could bid.
They were unable to beat the winning bid of £18,500 at Tuesday’s auction – but they are not giving up their efforts to protect it as a community open space.
Resident Darren Lewis, who gave a video update on the Preserve the green on Heath Gardens Facebook page, said: “We were in a position where we could bid in the auction but unfortunately we were outbid. We didn’t quite have the funds to match £18,500.
“The fact that we could go to that auction and be serious contenders in the bid is down to generosity and support from the whole community, so on behalf of residents I would like to offer sincere gratitude to everybody.
“The whole reason we started this was to preserve the green. We felt the best way to do that was to gain ownership of it.
“Clearly that hasn’t been possible, but the fight to preserve the green continues and we will explore every option available to us.”
Residents had established a charitable trust in the event their bid proved successful.
Simon Bell said: “What we would like is everybody pulling together. It’s about working together in all the various levels in the political groups out there to give the residents what they want, which is retain the green.
“We’ve got a couple of options we’re exploring already and we’ll come back to residents. What is important is that you’ve shown a lot of people what resident power can do.”
The land, which is approximately 923 square metres in size, has been designated in the Stone Neighbourhood Plan as local green infrastructure. But the Neighbourhood Plan, which sets out how residents want to see their area develop in the coming years, has not yet been formally adopted because a referendum scheduled for May 2020 was postponed due to the coronavirus pandemic.