But officials say more seats will be incorporated into the complex’s St George’s Guildhall theatre, in response to concerns from local arts groups.
Plans to redevelop the King Street site were first outlined in June, after its previous operators pulled out because of financial concerns.
At the time, West Norfolk Council officials estimated the project would cost around £2.25 million to complete.
But a meeting of the authority’s regeneration and development panel on Wednesday evening was told that figure had risen to £3 million, because of building costs and fees, plus another £300,000 for an activity plan.
However, officers say they are still keen to submit a bid for Heritage Lottery Fund support by the end of November, if a strong enough plan can be put together.
And council leader Brian Long warned: “If we miss this round, we’ll be another year or so down the line and we may well jeopardise this project going ahead.”
Further discussions are set to take place next week to look at other possible sources of funding, including the Arts Council.
Last month, a public consultation exercise was held on three draft proposals for the layout of the Guildhall theatre, all of which would have seen significant reductions in its seating capacity.
That sparked criticism from local arts groups, who warned they would not be able to afford to use the centre if the capacity was too low.
But officers said they are now working on a plan to provide a maximum capacity of 300, using a similar mix of flat and tiered seating to that which is currently found in the Corn Exchange.
A further meeting is to be held with arts group representatives next week.
If funding is secured, work could begin in late 2018 or early 2019.
But vice-chairman Patrick Rochford argued that should not be the main priority of the project.
He said: “The main thing is protecting the heritage building. The second thing is making sure its actually commercially viable and it reduces the liability on the taxpayer.”
However, Judy Collingham described the plans as “excellent”, though she was worried about how it would be promoted.
She said: “If you dont have a strategy of how that building is going to be used and made part of the community, I’m not sure another panel in 10 years time won’t be looking at it in exactly the same way. I’m unclear as to how and where the extra business is coming from.
The plans also include the provision of a new lift to help disabled visitors, while discussions are taking place with the Buildings Conservation Trust with a view to them using the Shakespeare Barn.
But Lesley Bambridge said she was concerned that was not an appropriate use of the space. She also called for improvements to the Fermoy Gallery to make it suitable to host travelling exhibitions.
Officials said they were further considering the possibility of developing the White Barn for residential use, outside the current scheme.