The move is at the heart of a new government attempt to revive "civic pride" and rebuild faith in local communities. Ministers are making clear that London will not be excluded from bids for major projects, but the priority will be regional ones.
This latest arts strategy fits in with recent cross-party calls for a new emphasis on the community. Stephen Dorrell, Secretary of State for National Heritage, last week highlighted his thinking when he told his department's regional conference in Leeds that it is "local allegiances which give our society a human scale as well as real diversity. Our task is to nurture those local allegiances and to ensure that the full and varied richness of our National Heritage is given every opportunity to flourish."
Up to £9bn of National Lottery funds will be available for the arts, sports, the heritage and the Millennium Fund over the next seven years.
One source said: "It is a huge opportunity to develop arts and heritage activity as a focus for civic pride."
Existing Arts Council funding for the big London theatres, orchestras and opera houses will not be cut. But the department sees the National Lottery as a unique opportunity to influence the shape of provision within the UK.
Although cash is distributed at arm's length from the Government, ministers have an influence.
In the performing arts, the money is distributed by the Arts Council, allowed to give grants for viable capital projects which have some other form of funding. The shortlist of projects considered for grants will be drawn up by the National Lottery Advisory Board, chaired by Peter Gummer, chairman and chief executive of Shandwick and brother of the Secretary of State for the Environment.
The Government also has an influence over the composition of the Millennium Commission, responsible for projects commemorating the next century. Mr Dorrell is its ex officio chairman.
Already the big London theatres and opera houses - including the Royal Opera House and Sadlers Wells - are bidding for capital repairs. Funding for new buildings is unlikely because of the large number of existing arts venues.
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