The monumental tapestry - nearly 20ft (6.1m) wide - depicts a bonfire on which St Paul directs the burning of irreligious books.
Designed by Pieter Coecke van Aelst, it is the only known survivor from a set of nine woven compositions emblematic of the Act of Supremacy.
It is thought to have remained in England until the late 1960s, when it was acquired by a dealer in Barcelona, and remains in a private collection in Spain. Tapestry specialist S Franses exhibited the work in London in 2018 before it embarked on a global tour. It is currently in the US.
The tapestry is subject to an export ban preventing it from being bought by an owner outside Spain. However, Spain’s Ministry of Culture has agreed that if a suitable UK institution with a link to its history can pay the £4.5m price tag, they will allow it to return to Britain.
Billionaire investor and philanthropist Jonathan Ruffer is behind the plan to buy the tapestry.
He has been supporting the regeneration of the town of Bishop Auckland and purchased Auckland Castle to save a collection of paintings by Zuburan. If successful, his planned Faith Museum at the castle will display the tapestry.
A fundraising campaign has been launched which has the backing of Archbishop Justin Welby and the Bishop of Durham, the Rt Revd Paul Butler. Funding of £3.5m is sought from the National Heritage Memorial Fund alongside a public donation target of £1m via justgiving.com/campaign/tapestry