The Government has backed a €100 million redevelopment of the Abbey National Theatre, which will be paid for largely by the sale of apartments, offices and shops.
The project will be built in a public-private partnership "in, and/or around the vicinity of the Abbey Street site", the Minister for Arts, Sports and Tourism, Mr John O'Donoghue, said following a Cabinet meeting.
Sources close to the planning for the project said the theatre could occupy the first three storeys of an 11-storey structure. The remaining space would then be sold off by a private developer to fund most of the cost of the €100 million project.
The plans were drawn up over the last year by an expert group, comprising representatives from the Department of the (then) Department of Arts, Heritage, Gaeltacht and the Islands, the Office of Public Works, and the Abbey.
The group urged the purchase of adjacent buildings leading up to the VHI's Abbey Street headquarters, and facing onto the Liffey.
Currently, the Abbey has 1,500 square metres at ground level, which is deemed inadequate for its needs and that of its theatrical sister in the basement, the Peacock.
Mr O'Donoghue said: "I look forward to the creation in due course of a new home for the national theatre that reflects its important place in the cultural life of the nation and as the cradle of dramatic genius."
Mr O'Donoghue said the redevelopment, properly finished, would play a key role in the efforts by Dublin Corporation to improve O'Connell Street and the general north-east inner city.
Last night, a spokesman for Mr O'Donoghue said expressions of interest from private builders would now be sought: "We would like to establish quickly whether there is interest."
However, Government sources said the Abbey would not be moved to the Carlton site on O'Connell Street, unless there are major problems with the purchase of privately-owned buildings.
According to some sources, the Government has been advised it cannot use compulsory purchase orders to buy the buildings needed for expansion of the existing site.
The Abbey's artistic director, Mr Ben Barnes, said the theatre has had numerous contacts with the Taoiseach, Mr Ahern, on the issue in the last year.