Western Isles Council will take over the direct management and daily running of the partially redeveloped Lews Castle if it fails to get a hotel operator in place.
The local authority will step in if conditions on a lease with sole bidder Natural Retreats are not agreed within six months.
Council leader Angus Campbell said the move was a “fall-back” position to ensure at least the ground floor facilities – including a café for a new-build museum next door – would be operational even if the hotel plans fell through.
The contingency proposal would allow the castle to at least partially re-open after years of neglect and decay.
However, significant repairs to the upper floors will not proceed unless a £3.2million shortfall is found to build 26 rooms and plush self-catering flats in the upper floors of the castle.
The hotel scheme was a central aim of the restoration and rescue project for Lews Castle.
A council report assesses the position as “critical” and stresses “a robust savings or funding plan be put in place to close the identified gap associated with Museum and Archive proposals.”
Estimated costs of the final phases of the rescue project for the castle building are £4.45million, the document states.
Mr Campbell said: “We are still trying to finalise funding for the upstairs part of the castle. We have to find extra money.”
Mr Campbell said the council is in talks with potential funders and will invest more of its own money into the works.
Natural Retreats is also expected to contribute towards the construction works.
In addition to the self-catering accommodation and guest rooms, it plans to have a staffed reception area, lounge bar, function rooms and café, retail and activity space.
Built by opium trader James Matheson in 1847, the deteriorating category A-listed building is on the Buildings At Risk Register.
Funding is secured for a modern new building for a Hebridean history and heritage centre adjoining the castle.
Building work is well underway and the premises will open in summer 2015.