A town hall is set to be transformed into a creative and community hub.
Westmorland and Furness Council approved plans for Penrith Town Hall as part of the Inspiring Eden regeneration programme.
The scheme aims to create a lasting asset for the town while strengthening its cultural sector.
Councillor Helen Chaffey, cabinet member for communities, customer services, culture and communications at Westmorland and Furness Council, said: "Penrith Town Hall is a beautiful building with so much to offer the community.
"We have a wonderful opportunity to create something with real and lasting benefits.
"We have spent considerable time listening to groups and organisations tell us their views and aspirations for it to be a vibrant, community-focused facility that complements and enhances the wider cultural offer across Eden.
"We see the hub as an inclusive and inspiring space for people of all ages to be supported in their creative development and pursuits, and where self-expression is encouraged.
"I am delighted that we have reached this stage in the journey and look forward to seeing the plans take shape and develop into a detailed scheme.
"What we have agreed today will give the very best return on this grant, which would have to be returned if not used for this project, and create an asset which Penrith can be proud of."
The outline business case proposes transforming the building into a multi-purpose cultural centre.
Plans include a 100-120 seat performance space, a café/bar and commercial kitchen to be run as a community kitchen, digital skills facilities, and rentable office and meeting rooms.
There are also proposals for youth-focused digital and creative spaces, and performance and education areas for the arts and community use.
A public consultation is set to begin on relocating the Penrith and Eden Museum to the refurbished site.
A full business case will be developed and presented to cabinet in December.
The town hall hub is estimated to cost £5.74 million.
The Ministry of Housing, Communities and Local Government last year approved a £7.09 million Local Regeneration Fund grant for the Inspiring Eden project, with £500,000 from the Borderlands Place Programme contributing to the Creative and Community Hub.
Councillors also decided not to proceed with the Eden Enterprise Hub project, citing financial sustainability concerns.
Councillor Andrew Jarvis, deputy leader and cabinet member for assets at Westmorland and Furness Council, said: "These are unprecedented times for local government finance, with more pressure than ever before on our budgets.
"The original Enterprise Hub concept was strong.
"But the financial environment has changed and the revenue pressures associated with the Barclays building make the Enterprise Hub scheme financially unsustainable.
"Continuing would expose the council to unacceptable financial risk.
"We do understand the need for economic support in Penrith and the Eden locality and so have allocated more than £2 million to support this sector in other ways.
"We look forward to working with partners and stakeholders to identify the most effective and efficient ways of using this money to benefit businesses."
The council said the decision reflects Westmorland and Furness Council’s changing financial position, influenced by the ongoing Fair Funding Review and increasing demand for essential services.
Had the enterprise hub gone ahead, it would have required significant long-term financial support from the council due to the forecast costs associated with the 2-3 Market Square building.
Instead, up to £2.03 million originally assigned to the enterprise hub will now be reallocated to other regeneration priorities across Penrith and Eden.
The report detailing the cabinet’s decisions, including information on the creative hub and the alternative use of funds, is available on the council’s website.
