Oswestry Villa is the chosen name for the new club after soccer fans were told legal red tape meant they were unable to use the title Oswestry Town FC.
The new club will be based at Gatacre playing fields in the town, although it is not yet known which league the new team would compete in. And members of Oswestry Town Council have agreed in principle to the new club using the town crest on its shirts.
The move will resurrect the Oswestry Villa name – a club of the same name enjoyed success during the late 1950s and early 1960s.
The original Oswestry club, Oswestry United, was founded in 1860, making it one of the world's oldest football clubs.
The renamed Oswestry Town Football Club won the Cheshire League in 1972, competed in the Northern Premier League and they also reached the FA Cup 1st round on several occasions.
However it went into decline and was forced to sell its Victoria Road ground to pay its debts folding completely in the late 1980s.
It reformed in the 1990 joining the Welsh league and in 2003 merged with the Llansantffraid based Total Network Solutions – now renamed The New Saints and recently crowned Welsh
Premier League champions. Graham Sutton, a member of the Oswestry Villa group, said: "The original intention was to use the name of Oswestry Town FC but consents have not been received."
Mike Robinson, secretary of Oswestry Villa, said: "Oswestry Villa was a very successful team which played in Oswestry in the late 1950s early 1960s. It is a name with a past.
"We decided on the name last week. At the moment there is not a team in Oswestry town centre.
"People from the town could walk to watch a game.
"It will be hard work to set up but the people involved are experienced football administrators."
At a council meeting last week councillors agreed in principle to the new club using the crest. However councillors said they wanted to know more about the club before granting permission.
Councillor Gareth Jones said it would be good to see the name Oswestry connected with a football club again.
He added: "I would like to know where the club intends to play. I would want to see it based on land within Oswestry."
Other councillors echoed his wish to see a club with the name Oswestry.
Councillor Paul Milner and Vince Hunt said they wanted assurances that the new club would ensure the name Oswestry was connected with good sportsmanship and honour and that the name and crest was not brought into disrepute.