While the business case has yet to be completed, Chief Minister Andrew Barr has revealed the proposed 2000-seat theatre could be just one part of a larger mixed-use development on the site of the London Circuit car park opposite the Sydney Building and Bailey's Corner.

Mr Barr said the land was expected to be sold to private developers, with revenue from the sale to partially offset the cost of building the theatre.

There remains no specific time frame for the project, although Mr Barr was hopeful of turning the first sod on the development before the 2024 ACT election.

The project has a price tag of between $100 million and $250 million, according to the government's infrastructure plan.

Plans to build a new theatre in the heart of Canberra have been on hold for more than a decade, with a 2009 feasibility study showing that a new 1800- to 2000-seat complex was viable for the nation's capital.

The Barr government has long identified the project as its main city infrastructure priority, ahead of building a new convention centre and sports stadium.

The Canberra Theatre Centre is more than 55 years old and has technical and seating constraints which limit the types of productions it can host.

The government allocated $1.1 million in the 2018-19 ACT budget for a business case on the proposal.

But almost three years on, that study has yet to be completed and few details about the project have been made public in the intervening period.

Government officials did tell budget estimates hearings in 2019 that the car park behind the Canberra Theatre Centre, which is used by ACT parliamentarians, had been identified as the preferred location for the new venue.

Mr Barr this week indicated the car park site opposite the Sydney Building on London Circuit was the preferred option.

While final decisions have yet to be made, Mr Barr said the project was set to include more than just a new performance venue.

"I would anticipate it would be mixed-use [development] and would include arts and cultural purposes," he said. "It would also potentially include a hotel and some retail and residential, and you will need to have some below-ground car parking.

"Those are the questions that are being worked through."

Mr Barr drew comparisons between the proposed theatre project and the near-complete Constitution Place development next to the ACT Legislative Assembly.

The government awarded the Snow family's Capital Property Group a $300 million contract to build the twin tower development, which includes government offices, a hotel and commercial tenancies.

Mr Barr said the government would need to factor in the redevelopment of the car park site opposite the Melbourne Building before pulling the trigger on the theatre precinct project, to avoid having hundreds of car parks removed at the same time.

The City Renewal Authority has invited expressions of interest for the purchase and redevelopment of the western car park site, which is next to the courts precinct. Offers are open until March 1.

In response to further questions from The Canberra Times, Mr Barr said the government had always been considering extra elements to the project.

"The government is considering the best options to maximise the benefits in revitalising the broader Arts and Cultural Precinct and the possible commercial models to best achieve this," he said.

Mr Barr said the business case was expected to be completed in the next 12 to 18 months. He was hopeful that construction could start in 2024-25, subject to a "viable financial model and successful tender process".

He said possible funding models were still being examined, but confirmed the land sale would only partially offset the cost of building the theatre.

The government's long-term infrastructure plan, published in 2019, listed the new Canberra theatre project for "consideration" in the next five years.

The existing theatre will be retained once the new venue is built. However, it will be repurposed with a "flexible-flat" floor so it can accommodate 2000 standing patrons.