Cheshire West & Chester Councils said it has received a £3m capital funding grant from Arts Council England at the latest time of asking after a joint bid between the local authority and Chester Performs was successful.
The funding coincides with the announcement that a detailed planning application for the £37.5m theatre, cinema and library complex will go before Cheshire West & Chester's strategic planning committee in October.
Gallery of new CGIs below
Work on the Northgate Street complex is scheduled to start in February 2015 and timed for completion to mark the 80th anniversary of the opening of the Odeon Theatre, which formerly operated the site.
Kier Construction has been appointed to build the scheme designed by Bennetts Associates.
Last year, the Arts Council, which invests £1.9bn of public money annually in arts and culture, rejected an earlier application from the council. CWAC is putting £30m into the scheme and expects a further £2m to be received from other grant sources.
Cllr Stuart Parker, executive member for culture and economy, said: "This is terrific news; a massive leap forward and a wonderful endorsement of the financial and artistic qualities of our bid.
"From discussions with the Arts Council, some of the key features of our successful application were the strength of the business model and the balance of the artistic and cultural programme. All party support and high level of investment from Cheshire West & Chester were also seen as important factors."
Cheshire West & Chester Council said the project could generate £16.9m annually and will employ 250 people on site at any one time.
Arts Council England said: "The Culture Centre and Library for Chester will be an important new building that will be a home for local artists but also provide a springboard for the creative ambitions of people across the county and beyond. Led by Cheshire West & Chester Council, it will provide a new home for regional arts producer Chester Performs and feature an innovative and convertible theatre for all artforms along with a seamlessly integrated library and cinema."
Click image to launch gallery