The total estimated cost for reconstruction of over 50-year-old building is Rs 5 crore.
"The government is likely to sanction the rest of the amount in the supplementary budget," said MLA (Berhampur) RC Chyaupatnaik.
"We have already discussed the matter with Tourism and Culture Minister Ashok Kumar Panda during his recent visit to the district," he added.
The new auditorium would be made two-storey from the present single-storey structure, which can seat 1,000 persons, said executive engineer, PWD (Berhampur), MR Tripathy.
The revamped auditorium would have facilities to hold dance classes and drama rehearsals apart from having greenrooms. It can also host meetings and seminars.
Located on the premises of Utkal Ashram, one of the historic buildings in the state, the ranga manch provided facilities for staging dramas regularly till last year. The auditorium was closed last year when it was badly damaged by Phailin, said Krushna Singh, secretary of Ganjam Kala Parishad, which runs the ranga manch.
"We had requested the government to renovate the ranga manch to facilitate dramas," said drama artist Raju Padhi.
Other auditoriums like Prakasham Hall and Gopal Krushna Ranga Manch are in a dilapidated state.
The organizations are unable to hold functions at Town hall of Berhampur Municipal Corporation due to its exorbitant rent, said Mihir Tripathy, another artist. The corporation is charging Rs 16,000 per day.
Due to the high cost of the town hall, an organization held a week-long drama festival on the premises of Utkal Ashram by making a makeshift stage last year, he said.
Berhampur is the hub of cultural activities in South Odisha.