The 1856 South Chapel in Bishopwearmouth Cemetery on Chester Road is in dangerously poor condition and fenced off.
Historic England say it has been a listed building since 1994, as was the identical Central Chapel, which was demolished some years ago and sat about 100 metres away. The Catholic North Chapel still stands, but it too is in disrepair.
Notable graves and memorials close to the South Chapel include that of George Maling, who received the Victoria Cross for helping save the lives of 300 men in the First World War.
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Other notable graves nearby include those of the Vaux family, James Hartley who was Sunderland MP 1865-1868, Sir Theodore Doxford of Doxford’s shipyard fame, Major General John Reed who fought under the Duke of Wellington, and James Allan founder of Sunderland AFC.
Sunderland City Council say the scaffold currently standing round the steeple of the chapel is there to enable a detailed inspection of the work required.
No decision has yet been made as to the longer-term future of the building.
However, Conservative councillor William Blackett, whose St Chad’s ward includes the cemetery, is encouraged. He has been pushing for action on the chapel for two years.
“Shortly after the (Echo) article on the chapel a few months back I had a really productive meeting with Cllr Linda Williams and council officers.
“We set out how we were going to achieve an improvement in the chapel's condition and it's great to see scaffolding up as one of the first steps in the process of safeguarding the future of the building.
“It is an important part of our heritage and is surrounded by graves of notables ranging from a VC winner, to an MP, to a general who fought under the Duke of Wellington during the Napoleonic Wars.”
A council statement said: “At the moment the council is carrying out a detailed inspection of the steeple and is still in the early stages of evaluating the scope of the repair and maintenance works required.
"This investigation will allow the council to then assess options, timescales and costs.”