Two subterranean oil tanks behind Tate Modern will be transformed into galleries, creating the "most exciting new space for art in the world", according to the gallery's chairman.
Completion of a £215m extension at the Tate has been delayed until 2016. But the first phase, the conversion of the oil tanks, will be finished in time for the 2012 Olympics.
"To have come as far as we have is no mean achievement," said Lord Browne, chairman of the Tate's trustees. He said 70 per cent of the funds needed for the development had been raised.
The tanks will be turned into gallery spaces for installations, film, performance and discussions. They have been unused since Bankside Power Station, Tate Modern's predecessor, was decommissioned in 1981.
The next phase of the extension project will include a new building designed by the Swiss firm Herzog & de Meuron. Overall, the project will create 70 per cent more space for displaying the Tate's collection.
Announcing its annual report yesterday, the Tate said it is the second most-visited arts institution in the world, behind the Louvre. Over seven million people visited its four galleries between 2010 and 2011.
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