Arts Minister Joy Burch said the "major capital project" would support the centre in its role as the region's premier performing arts venue with about 200,000 people attending performances and events at the centre annually.

"The government recognises the need for continuing investment in the Canberra Theatre Centre to ensure that the Canberra community and visitors to our region can access a wide range of high quality theatre productions," she said.

"We also acknowledge the important role that the venue plays in the life of the city centre, by bringing hundreds of thousands of people into the city, who then patronise city centre restaurants, cafes and shops."

The money allocated as part of the ACT's budget will also pay for upgrades to the green room, dressing rooms, backstage and stage door areas.

The theatre's stage will be renovated and improvements made to security, electrical and fire safety, heating and air-conditioning.

The upgrades continue a staged improvement program for the centre.

Last year, the government spent $170,000 on a study to consider the feasibility of a 4000-square-metre site next to the theatre's playhouse for a new larger theatre space.

The study was funded by a $1.2 million allocation from the 2014-15 budget, which was expected to be spent on maintaining heating and cooling systems, and for electrical work and lighting.

Ms Burch said the government was "progressing studies" to explore possible future upgrades.