Arts Council England has revealed its 2008–2011 funding strategy.

£1.3bn will be invested in 888 arts organisations, of which 753 (76 per cent) will receive an increase in line with or above the rate of inflation, with the main beneficiaries being Pallant House Gallery in the south east and the Roundhouse in London.

Of 81 new organisations to receive regular funding for the first time are the capital’s Barbican and Artichoke venues.

However, 185 organisations previously supported by the arts organisation will not have their funding renewed, including the Gulbenkian Theatre and Cambridge Arts Theatre, and a further 27 will have their funding reduced.

Meanwhile, £25m will be spent on English theatre, following the results of the Theatre Review.

Arts Council chair Christopher Frayling said: “This is a radical plan – as the controversy of recent weeks has shown – but one I firmly believe will help to make the arts in England even stronger.

“The plan backs excellence, brings in a new generation of practitioners and redistributes resources across the arts sector.”

New chief executive Alan Davey added: “This has been the most far-reaching review of public funding of the arts in the history of the Arts Council and the first we have conducted as a single national organisation."

Photograph: the capital’s Barbican venue will receive Arts Council funding for the first time