Plans for a new 500-seat theatre in Worcester are to be scaled back due to a £3.5m funding gap.
Worcester City Council said the decision to revise the plans for the Scala Theatre, which is being paid for with a share of nearly £18m from the Future High Streets Fund, was due to a "dramatic increase in construction costs".
The new plans for the listed building will reduce capacity to 300.
Other cost-cutting revisions include scrapping a planned flexible stage along with proposed taller rooms and balconies.
David Blake, the city council's managing director, said: "Rising costs are having an impact on every aspect of our lives and unfortunately the council's ambitions for the Scala are no exception.
"We have had to reconsider our plans and work out how we can still provide Worcester with a popular and attractive new arts venue, one that will become a popular hub for live entertainment and the arts in the very heart of our city."
If councillors back the revised plans, the council intends to ask the Department for Levelling-Up, Housing and Communities for permission to spend its funding beyond the March 2024 deadline.