Museum society treasurer Les Pullar said the project was necessary because the Waikouaiti Museum, the former Bank of New Zealand building, was unsuitable for conserving and displaying the 10,000 items held by the society.
The first stage of the project would be to construct a purpose-built museum behind the present building on the corner of Main Rd and Kildare St.
This building will also include an area for a permanent information centre allowing for the display and sale of locally produced items. The second stage will involve the restoration and conservation of the present 1869 museum building.
It is hoped that work on the museum project will start before Christmas.