Kaitangata Community Hall chairman Evan Dick said the committee had been planning a new community hall for the town for over six years.
The 800-strong community's current hall, at the corner of Exmouth and Eddystone Sts, was in a state of disrepair.
A new purpose-built facility or an upgrade to the current hall was going to cost too much so the committee investigated other options.
A deal was made with the committee of the nearby Presbyterian church hall on the opposite side of the street. The Kaitangata hall group planned to add an extension to the church hall and co-exist with the church group.
The extension could cost about $700,000 and the latest grants mean the group now had enough money to start the work.
''We've got all the money now ... it's pretty cool,'' Mr Dick said.
The committee received $120,000 from the Otago Community Trust last week.
''It's huge for our town because, the way it was looking, we were going to lose [the hall].''
Mr Dick said the committee would not have been able to achieve what it had without the support of the town or community.
The group had raised over $90,000 in fundraising on its own with help from events such as the Kaitangata Car Show and Run as well as efforts from the local Crescent rugby team.
Mr Dick said the committee had worked tirelessly to achieve its goals and he did not want to take the limelight away from them.
''They've done all the hard work.''
He anticipated the designs for the extension would be completed by Christmas so building could begin next year.
The group also received funding from the Lottery Grants Board, A J and M C Begg Charitable Trust, Alexander McMillan Trust and the Clutha District Council as well as several other businesses and entities.
