The channel that launched original comedy series like Being Human, Mighty Boosh, Bad Education and Little Britain could be off air by January, after the BBC Trust approved plans to make it an online-only service.
The Trust on Tuesday ruled in favour of taking BBC3 off-air in a decision which it said would save the broadcaster £30m a year, but one those fighting to save it labelled "disastrous" for the fostering of new talent and the "kiss of death" for the channel.
BBC Director Tony Hall announced his intention to close the channel in March last year.
BBC3 launched original comedy series like Little Britain and Mighty Boosh
Close to 300,000 people signed a petition against the move, including Harry Potter star Daniel Radcliffe, Broadchurch actress Olivia Colman and Poldark's Aidan Turner.
The Trust said that it had some "clear concerns" about the short-term impact of the change, including "a potential impact on the ability of the BBC to try out new ideas and develop new talent".
And admitted at least initially the channel would have a "much smaller audience than the broadcast channel it is replacing".
However, taking the channel off-air would save the broadcaster £30 million a year, it found, and its new incarnation would be more distinctive than the current BBC3 channel, whose audience is falling.
The Trust said that the move should be dependent only on the Executive agreeing to several conditions, including clearer commitments to shows on BBC1 and/or BBC2 which appeal to younger audiences.
Campaigners who battled to keep BBC3 alive as a TV channel, labelled the move "disastrous" for the fostering of "new talent" and "innovative ideas".
BBC Director Tony Hall announced his intention to close the channel in March last year
Jimmy Mulville, who runs production company Hat-Trick, behind hit shows including Room 101, Father Ted and Have I Got News For You, said the proposed move online would be "the kiss of death" for the channel and leave it "competing with huge behemoths like Netflix and Amazon who are spending hundreds of millions of dollars on one show".
In its findings the Trust conceded that there could be a "risk that (the online channel) may have less appeal to producers, writers and actors, impacting the shows that are commissioned."
A further 28-day consultation period will now take place before a final decision is made on BBC3 later this year. It is thought the channel could close as early as January.
The Trust said that the BBC would need to agree to conditions to mitigate against the short-term loss of younger audiences.
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BBC3 to go off-air
But in a blow to the BBC Executive, it also said that plans for a BBC1 plus one channel should be rejected.
BBC director-general Tony Hall announced the plans for the flagship channel in 2013.
But the BBC's governing body said that a plus one channel would be at the expense of commercial rivals and reduce the profitability of ITV and Channel 5.
It has said that plans for the BBC iPlayer, to allow viewers to watch more shows before they are screened on TV, should be approved.
The Executive originally said that plans to move BBC3 online, as a service targeted at 16 to 34-year-olds, would save £50 million a year, but the Trust said that it had taken other costs into account, which reduced the saving to £30 million.
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BBC Trust chairwoman Rona Fairhead said: "It is clear that the long-term future of broadcasting is online and the BBC needs to find new and exciting ways to help audiences make that transition, while bearing down on costs overall.
"We know young audiences are already moving towards the online future, but we do recognise that in the short term some of them will feel the immediate impact of the BBC Three proposals.
"We are therefore asking the BBC for commitments to ensure it uses the full range of its television services to better serve young people and others who make up BBC3's audience."
The BBC wants to use savings from the closure of the BBC3 channel to invest in drama on BBC1.
BBC3 supporters had been hoping to follow in the footsteps of campaigners who successfully saved BBC 6 Music from closure in 2010.
A petition to save the channel was signed by over 270,000 people
The BBC Trust said in 2014 that BBC Three was its most successful channel for appealing to young and diverse audiences.
The petition to save the channel stated:
We believe that the BBC does not do enough to cater for young adults, and scrapping BBC Three from cable, satellite, and terrestrial television would be a big mistake. While broadcasters should invest in new online ideas the BBC should not take BBC 3 off our TV screens.
With this move there will be less money for quality programming, will restrict access for those in many rural areas, as well as those without an active broadband connection. Furthermore, the BBC is wrong to then re-spend the money on a BBC1 +1 at a time at a time when the BBC want people to turn to the iPlayer.
The reaction on Twitter to the BBC3 decision was one of disbelief, although reactions were tempered by the long lead-up to the Trust's decision.