The $5m grant, announced by NSW Minster for the Arts Ben Franklin and NSW Minister for Regional Transport and Roads Sam Farraway, means the first sod will be turned for the $25 million project early next year.

This follows a $10 million pledge from the Federal Government in December, which was matched by Orange City Council.

In announcing the grant, which he said was the largest sum to be allocated from the NSW Government's $72m Creative Communities fund, Minister Franklin said when completed, the project would enhance Orange's reputation as the cultural hub for western NSW.

"[Orange] has got such an extraordinary cultural history, it's got already, this incredible cultural hub that you see behind you [the Regional Gallery] and it's going to have a precinct which will be the hub for the entirety, I think of Western NSW," Mr Franklin said.

"Orange has proven itself to have a group of people who are committed to the cultural life of this town, but more over this region and we know that if we provide this support for Orange City Council they will deliver on the project."

Mr Franklin said the $5 million grant would enable the auditorium to be increased in size to 250 seats from the Hill Street building's 185 seats.

"Making it what I believe the best auditorium for classical music this side of the Great Dividing Range," he said.

The new building will also triple the amount of rehearsal space and ensure the studio space will increase by 50 per cent to the benefit of the regional.

"It's the final piece of the puzzle in our cultural project precinct, bringing music, arts, education and culture to the whole region and its visitors experience," Orange Mayor Jason Hamling said.

Chair of the Orange Regional Conservatorium Committee Dr Pam Ryan and ORC director Donna Riles were thrilled with yesterday's announcement which will eventually see the Conservatorium move out of its Hill Street home, which it has outgrown.

Mrs Riles said the ORC started around 30 years go with six staff and about 30 students in cottages near the civic centre but now boasts a staff of 42 and more than 1800 participants.

Ms Ryan said the Hill Street building had enabled the conservatorium to flourish but it had now come to the end of its useful life.

"What we see is that it's not only about the buildings, which is fabulous but it is also about how the Conservatorium has moved out into the community. It's not just about community coming in, it's about how it spreads music and spreads culture," Ms Ryan said.

"It's been a really lovely combination of local, federal and now state government coming to the party and I guess sharing the vision of what could be the case for Orange.

"It really will be a remarkable building for a conservatorium. I'm not sure there will be another regional one quite like it."

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