Darlington Arts Centre is to be transformed thanks to a £250,000 grant.
The funding from the Northern Rock Foundation will provide a new glass-roofed theatre atrium, which will turn a disused courtyard into a focal point of the building.
The new area will be multi-purpose and provide the entrance to the theatre, Myles Meehan Gallery, new studio theatre and the Garden Bar.
In a report to yesterday's environment scrutiny committee of Darlington Borough Council, Steve Thompson, assistant director of leisure and arts, said it would provide much-needed additional gallery space for community art.
Seating would be provided for people to meet and extend the capacity of the caf and bar facilities to serve theatre and film audiences.
"It is anticipated that this will generate more commercial income support to the programme," he said.
This latest award follows a £300,000 grant from the Arts Council to transform facilities, increase capacity and establish a young people's theatre.
A further £92,000 has also been secured from the same body to commission professional expertise for developing things such as audience facilities and technical and stage design.
The dance studio is to be transformed into the new 100-seat studio theatre with improved backstage facilities for artistes.
A further bid has been submitted for funding to provide new landscaping and a sensory garden.
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