The theatre opened its doors again in December 2007 after a £2.1m revamp
Exeter's Northcott theatre has a more certain future after being promised another two years of funding by the Arts Council.
The theatre will receive almost £1.1m between April 2009 and March 2011.
There were fears earlier this year it would have to close if grants were withdrawn. It had only reopened in December 2007 after a £2.1m revamp.
The Arts Council said it had agreed to continue funding but said the theatre had to become a "centre of excellence".
After the Arts Council said it was considering cutting funding earlier this year, a high-profile campaign was started to save the theatre and a 26,000 signature petition was handed in at a meeting of the regional Arts Council in Exeter.