A statue of Sekhemka valued at £2m was gifted to Northampton's museums by the 4th Marquis of Northampton in 1880.
The Conservative-run council plans to sell it and use the money for heritage schemes but this has been challenged by the Liberal Democrat group.
The ruling party said it could not comment during legal talks.
The sale was earlier challenged by Lord Northampton, a descendant of the marquis, who said the council did not have the right to sell Sekhemka.
The 30in (76cm) limestone figure of a court official clutching beer, bread and cake - items for the afterlife - is believed to have been acquired by Spencer Compton, the second Marquis of Northampton during a trip to Egypt in 1850.
It was presented to the museum by his son some years later.
The council said the statue's value made it too expensive to insure and secure, and its sale could benefit other local heritage and cultural projects.
The Liberal Democrats said the sale should be stopped and the statue ought to remain in Northampton.
Council leader David Mackintosh said: "We have made the decision to auction the statue and reinvest the money into our towns culture and heritage.
"Our legal team are in contact with Lord Northampton, and it would be inappropriate to comment further."
The issue will be discussed at a forthcoming meeting of the council.
Opposition parties on Northampton Borough Council have asked for greater clarity on its plans to sell a 4,000-year-old Egyptian statue.