The budget increase was approved by the Queenstown Lakes District Council at a meeting in Wanaka last week.
The funding has been brought forward from $300,000 set aside for the hall project in the council's draft 2012-13 plan.
Cost estimates to upgrade the hall are between $2.5 million and $3 million.
At least $1.6 million has already been raised, including a $1 million grant from the Central Lakes Trust, $100,000 from the Peter Wilding bequest and $400,000 from the Community Trust of Southland.
Council chief executive Debra Lawson said more detailed designs had been made available, increasing earlier cost estimates by $437,000.
The project managers, Graham Johnson and Paul Wilson, would commission another estimate update in the next few weeks.
"It is acknowledged by the trust, the council and project management that it is not desirable to go above a project cost of $3 million," Mrs Lawson said.
The council has already provided $20,000 in 2010-11 (investigation phase) and $120,000 in 2011-12 (capital projects).
Project management cost $35,000 during 2011-12 and would increase to $37,000 in the next financial year.
Mrs Lawson said this took the council's specific contribution to $512,000, plus an additional contribution from the separate Memorial St realignment project to make safer pedestrian areas outside the hall, at no extra cost.
Lakes Environmental was also supporting the project by sponsoring the building consent costs, Mrs Lawson said.
An application for $800,000 is before the Lottery Community Funds Committee. Showbiz Queenstown has contributed $125,000 in lighting and sound resources, and the trust has raised $10,000 and received an additional $17,000 in pledges.
More fundraising events were planned, local businesses supported the project and the trust wanted to raise an additional $400,000. It should learn in July whether the Lottery application had been successful, Mrs Lawson said.
Construction has been scheduled from late July to February 28, 2013, and the hall would be closed for about 30 weeks. However, construction would not proceed until full funding was in place, she said.
"If work is to be halted when this year's funding allocation runs out, this would cause at least a three-month delay to the work schedule and compromise the ability to stage the upgrade work around the (New Zealand) Rugby Sevens.
"It would also compromise ... the ability to target business and voluntary labour support for specific portions of the project.
"Hall bookings have already been blocked out from July 22 to the end of February.
"An inability to proceed to tendering as currently planned would likely see the hall empty for several months and subsequent bookings having to be cancelled, or the project delayed for a considerable period," Mrs Lawson said.
The councillors voted unanimously to adjust its budgets.
