The Cornerhouse cinema and Library Theatre Company plan to join forces and move into a new £19m art facility in Manchester city centre.
The two organisations will relocate to a proposed building on the northern side of First Street.
The building will include five cinemas, over 6,000 sq ft of contemporary gallery space, a 500-seat theatre and smaller studio and education space and an outdoor performance space as well as café and back of house facilities.
Sir Richard Leese, leader of Manchester City Council, said: "This is exactly the sort of scheme we need to get people into work, get our economy moving even faster, and show the world that Manchester is still an ambitious city still on the up."
The council said the Cornerhouse is constrained by its current building, on Oxford Road, which is unsuitable for it to expand.
The council added that the Library Theatre Company had also outgrown its previous home in the basement of the Central Library and its new home will enable it to realise its vision of becoming a major centre for the production and promotion of contemporary theatre outside London as well as expanding its educational work.
Manchester City Council said the scheme is fully-funded from the £16m already earmarked from the Library Theatre relocation with the remaining £3m coming from third party contributions and future capital receipts.
Ask Developments is working with the council on the 20-acre First Street site and a contest is being held for the final design of the new building.