Plans to establish a new national art gallery in Wales have been put on hold by the Welsh Assembly Government until at least 2012 due to funding concerns.

Instead, £1.7m of additional investment has been made available to three regional galleries, as well as the National Museum Cardiff, to improve access to arts exhibitions in Wales. An assembly government-commissioned report, examining the future of visual arts, found that it would cost £85.5m to establish a national art gallery, and a further £38.8m to create a national centre for contemporary art. Both projects would also require further on-going funding for development and running costs.

But Alan Ffred Jones, the assembly government's heritage minister, said that such plans were currently unviable in light of the economic conditions and a reduction in Lottery funding. "These reports outline some very exciting proposals, which would put Wales firmly on the map in terms of visual arts," said Jones. "In the current economic climate, however, it would be unrealistic to suggest that these plans can become a reality in the immediate future.

"These projects should be viewed as long term aspirations for Wales, which could not begin to come to fruition until sometime after 2012 at the earliest." However, Jones did announce that Aberystwyth Arts Centre, Chapter Arts Centre in Cardiff and Oriel Mostyn in Llandudno would benefit from additional funding in the short term.

The National Museum Cardiff will also receive £1m over the next two years to fund the conversion of its west wing, which will increase exhibition space by 40 per cent by making use of former archaeology galleries.