The Pegasus Theatre in East Oxford is a step closer to having a £6.5m facelift - but more money is needed before the project can begin.

Architects Feilden Clegg Bradley gave a presentation about their designs to members of Oxford City Council's east area committee at a meeting last night.

The Arts Council of England has confirmed it will contribute £2.7m to help renovate the 50-year-old building in Magdalen Road.

Grants of £271,000 from Oxford City Council and £900,000 from Oxfordshire County Council will also go towards transforming the building, with work scheduled to start in April 2008.

Fundraisers hope to raise a further £2.5m over the next three years to enable the project to go ahead.

Project director Simon Daykin said the Pegasus was one of only two arts organisations in the South East to receive capital funding from the Arts Council in this round of grants.

He added: "It has given us a massive boost. It's good news we have got the Arts Council funding in place, be we still have got a way to go on this."

Once the necessary money is raised, the theatre will be closed for 18 months, and the building demolished, apart from the shell of the auditorium.

This will form the basis of the structure of the new building, with a theatre, rehearsal rooms, studios, workspaces for artists, offices and a caf-bar.

If the fundraising drive succeeds, the work should be completed by September 2010.

Mr Daykin said: "It will be a very creative, stunning building as well as a functional building.

"We are part of the community and it is important that it is a space they can call their own and feel comfortable with."

He added that during the closure, Pegasus performers and youth groups planned to 'borrow' other theatres in Oxford to put on shows.

Artistic director Euton Daley said: "It is not that comfortable for the audience and guests at the moment.

"We want to look after them in a better way and provide a better space for everyone."

For more details, see www.pegasustheatre.co.uk