Efforts to establish a new northern base for the Royal Opera House at Manchester's Palace Theatre have taken a step forward after officials reached an agreement with trustees of The Lowry arts centre.

Lowry trustees had opposed the £100m scheme on the grounds that it could have a negative impact on the city's arts provision and threaten the long-term viability of the Salford centre, which opened in 2000. However, the Royal Opera House (ROH) and Manchester City Council (MCC) have now struck an deal with The Lowry, which will see the Palace Theatre mainly act as a producing theatre, as well as hosting opera and music theatre.

The Lowry will continue to be the North West's regional base for lyric theatre under the proposals, with a core programme of theatre, ballet and dance from across the world. MCC leader Sir Richard Leese said: "Creating Royal Opera House Manchester will consolidate the Manchester city region's position as a leading creative economy. ROHM will be a major production centre for world class performances, including those of Manchester International Festival, and an innovative centre for skills and training in the creative industries. It will also create a significant number of local jobs."

Culture secretary Ben Bradshaw added: "It is very good that all the parties in this exciting project are working together, with the common aim of delivering world-class cultural facilities for the city of Manchester and the North West. There is still much to do, of course, but this has the potential to be something really special and I am pleased to give it my whole-hearted support."