The Leeds Institute in Millennium Square will house the museum

The grant will allow the transformation of the Leeds Institute building in Millennium Square which currently houses the Civic Theatre.

The new facilities will enable one million items to be put on show, some of which have been stored for decades.

The new museum is expected to be completed in 2007.

Huge reserves

Four collections of national importance, unique local history artefacts, decorative art and even a prehistoric hippo from Armley are among the exhibits which will be shown publicly for the first time in more than 60 years.

Most have been in storage since the old museum on Park Lane was bombed in 1942.

The new museum will have four themed levels of permanent gallery space - the history of Leeds, world cultures, the ancient world and the environment.

A separate resource centre, expected to open in 2006 at Clarence Dock, will contain the city's huge reserve collection.

'Fantastic news'

The project will cost around �27m in total. Leeds City Council will top up the lottery money with �6.7m of its own cash with the rest coming from other grants and sponsorship.

Leeds City Council executive member for learning and leisure Judith Blake said: "This is absolutely fantastic news.

"We are all really overwhelmed and very excited that we can now take this hugely important project forward."

Heritage Lottery Fund trustee Derek Langslow said: "As the third largest metropolitan area in England, the lack of a city museum has been a real issue over the past few years."