A "substantial" grant is likely to be made to The Royal Shakespeare Company (RSC) to help it achieve a £100m revamp of its Stratford-upon-Avon theatre.
The RSC had planned to demolish the Royal Shakespeare Theatre
Regional development agency Advantage West Midlands (AWM) said it was prepared to throw its weight behind plans to redevelop the attraction.
It is understood AWM will contribute £15m if the theatre company meets its funding criteria.
The RSC intends to build a new 1,000-seat auditorium.
Art Deco features
AWM chief executive John Edwards said: "The theatre is recognised across the world and the redevelopment will reinforce its position as a centre of theatrical excellence on the world stage.
"The RSC at Stratford is a real asset to our region and it is only right that we support this project where we can."
The RSC announced plans last month to redevelop the Grade II-listed theatre, retaining its original Art Deco features.
The company had originally planned to knock down the 1932 building, but decided against it after protests.
'On the map'
The RSC is now looking for an architect and funds for the project.
RSC executive director Vikki Heywood said: "Transforming the Royal Shakespeare Company gives us a once-in-a-generation opportunity to put Stratford and the West Midlands back on the map as one of the country's key cultural destinations.
"We're confident that improving our theatre and facilities will be a great way to attract visitors to the region and encourage them to stay longer while they're here."