ARTS Council England has approved the initial bid by Square Chapel Centre for the Arts to build a £5.9 million extension.
It can now finalise plans for the Cornerstone project beside Halifax Piece Hall.
Square Chapel director Sally Martin said they had applied to the Arts Council for £3.9 million and will seek funding from companies, individuals and trusts and foundations for the remaining £2 million. The fundraising effort is off to a flying start with £850,000 already pledged.
Square Chapel receives over 40,000 visitors a year.
The extension combines glass, copper cladding, stone and other modern materials designed to complement the iconic red brick of the current 1772 chapel.