The DCMS has invested £4m into an £11m project to create the Tower Festival Headland outdoor performance space and urban park.

The project is part of a £174m scheme to rejuvenate Blackpool's seafront, as well as the wider 15-year Blackpool Resort Masterplan which aims to revitalise the town as a tourist attraction.

The 20,000-spectator events space, to be situated to the front of the Blackpool Tower between the North and Central Piers, is intended to support the town's regeneration efforts. It will provide a location for the switch-on of the Illuminations, music concerts, local and national events such as the Aero GP.

The project is a partnership between Blackpool Council, ReBlackpool Urban Regeneration Company, Defra and the Northwest Regional Development Agency (NWDA), who will fund the remainder of the project.

Blackpool councillor, Maxine Callow, said: "The Tower Headland will provide something we have never had in Blackpool before. We are currently in a position where we cannot hold some major events and performances as we don't have appropriate outdoor space available."

When completed, NWDA, Blackpool Council and private sponsors will provide £5.4m to hold events at the space.

Sir Howard Bernstein, newly appointed chair of ReBlackpool, said: "We are determined to make Blackpool a better place to live, work and play, through physical, social and economic regeneration. This is the first step and will lead to further investment by both private and public sectors."

The DCMS' £4m investment is part of its three-year Sea Change Programme, which will run from 2008 to 2011 and will invest £45m into regenerating costal resorts.

The programme is being led by CABE, regional development agencies, English Heritage, the Heritage Lottery Fund, the Museums, Libraries and Archive Council, Arts Council England and the BIG Lottery Fund.

Steven Broomhead, chief executive of the NWDA, said: "Confirmation of this investment is great news for Blackpool and for the region. The resort has some exciting plans that will make the most of this culture-led approach to regeneration."

"The new performance space and improved streetscape will complement work already being undertaken on Blackpool's promenade and will create a public realm that will benefit residents and visitors."