Minister for creative industries Danny Pearson and Member for Bendigo West Maree Edwards visited the museum to announce the grant on Friday which was provided through the Infrastructure Planning and Acceleration Fund.

"Castlemaine Art Museum is a central and inspiring part of our community and the potential to expand and to grow the museum - and the social and economic contribution it makes to the region - is significant," Ms Edwards said.

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The master planning project will look at ways to celebrate and preserve the significant heritage features of the building, create new exhibition, event and education spaces and bring the whole venue in line with accessibility requirements.

This first stage of the master planning project is expected to take approximately six months.

It will create the foundation for the Castlemaine Art Museum team to approach potential partners and supporters to take the project to the next stage.

Castlemaine's century-old art museum came close to shutting its doors back in 2017 due falling revenue and rising costs.

An eleventh-hour donation from an anonymous person saved the museum from immediate closure, with the $250,000 gift ensuring its doors stayed open for at least two more years.

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