Plans to create a new £13m arts complex - part of a new cultural quarter in the centre of Southampton - have been given a major boost after more than £7m was provided by Arts Council England (ACE).

Southampton City Council (SCC) has selected property group Grosvenor to deliver the scheme, which forms part of a wider bid to revamp the city's former Tyrrell and Green building in Guildhall Square. ACE initially agreed to contribute £5.7m towards the development before agreeing to an additional £1.5m to cover changes to the plans, which will include a re-design and relocation of the gallery to the ground floor.

Proposals drawn up by Grosvenor's partner architects, CZWG, include 75,000sq ft (6,968sq m) of gallery spaces, auditoriums and educational areas, as well as restaurants and retail units. SCC leader Royston Smith said: "Despite the current economic climate, Southampton has defied the odds by remaining on course to build a new Cultural Quarter in the city, and create new jobs for our residents."

John Hannides, cabinet member for leisure, culture and heritage, added: "This capital project has been developed over a significant period with a range of arts organisations. It will be a place where the arts can thrive and be celebrated."