An Oxford theatre is preparing to choose which architect will draw up plans for its transformation into a unique arts complex.

Pegasus Theatre's seven-year dream of creating a state-of-the-art centre came a step closer in February, when Arts Council England announced it would give £2.7m.

The theatre, which hopes to start fundraising next year, does not yet know how much the total cost will be.

General manager Simon Daykin said 34 architectural firms from across Britain, and some based abroad, had expressed an interest in the project.

Each of the six shortlisted firms has four weeks to submit proposals and costs, and the successful firm will be chosen next month.

Mr Daykin said: "It's a very exciting time. The six shortlisted companies are those which have really got under the skin of Pegasus Theatre.

"We want the building itself to be a piece of art, but we also want it to be comfortable. More than 200 young people use the theatre and we want it to be suitable for them and all our users."

The run-down 1970s building in Magdalen Road, east Oxford, which is home to Oxford Youth Theatre, could feature a new auditorium, rehearsal rooms and a studio.

Members of the public will be given the chance to suggest ideas once the architect has been chosen.

Mr Daykin said it was important that as many people as possible had their say because the project was so important to Oxford.

The theatre is working closely with Oxford Inspires, which was behind the city's Capital of Culture bid, and hopes the building will be completed early in 2007.

It has until next April to finalise plans before they are submitted to Arts Council England to "unlock" the allocated funds.