The project was outlined in a cultural and heritage strategy prepared by the council in 2005 and follows a $10.3 million restoration and redevelopment of the Opera House in Oamaru which was completed this year.
That project was realised with more than $7 million coming from outside sources.
The council injected $3 million from property sales.
The latest redevelopment proposal has been included in the council's 2009-19 long term council community plan (LTCCP), finalised at a meeting on Tuesday.
A two-stage redevelopment of the Forrester Gallery costing $3.8 million is now planned to start next financial year, although it will take a few years to reach fruition and that will depend on obtaining grants and donations from outside sources.
The council set aside $700,000 from reserves to start the project, providing seeding funding for applications for grants and donations.
The $8 million museum-library redevelopment has been brought forward to start in the 2011-12 financial year, but how long it will take will also depend on outside funding.
Part of the cost will be met with $1 million allocated from council reserves, again providing a base to seek grants and donations.
The redevelopment represents a substantial investment by the council in three cultural facilities, one which received support through submissions the public made on the LTCCP which urged the council to get on with it sooner rather than later.
The Forrester Gallery redevelopment has been outlined in a report by Dunedin architects McCoy and Wixon.
The first stage is installing a lift to provide public access to the upper floors and to make it easier to install exhibitions.
It includes making provision for stage two, which involves expanding the gallery.
The expansion would address problems of storage, exhibition space and access.
It was suggested the council proceed with stage one first, then switch to the museum-library redevelopment.
However, when councillors learnt that delaying stage two could add up to $1 million to the project, they decided to proceed with both stages as one, providing the necessary outside funding could be obtained.
The museum-library redevelopment would mean redevelopment of the existing site, including expanding the space available for both facilities and enhancing the services provided.
It would enable the nationally important Willetts collection of Waitaha and Ngai Tahu artefacts to become a centrepiece within the museum.
At present, very little of the extensive collection can be displayed.
The North Otago Archives - part of the museum - would also be upgraded to meet New Zealand storage standards.
Similarly, the library would get extra space for enhanced services, as well as to display collections of significance, such as the Janet Frame collection.
