Initial works on the Lichfield Street gallery include relocating the café from the top floor to a larger ground floor space and improvements to the St Peter's Gardens entrance.
City of Wolverhampton Council's Cabinet Resources Panel will be asked next Tuesday (28 March) to sign off £750,000 of borrowing from the capital budget - which can only be used to finance schemes like building improvements - to fund this part of phase 1.
These works are expected to start in autumn 2017 and complete in spring 2018.
Also in the pipeline for the gallery, subject to securing external funding, is improved disabled access, and larger and more flexible exhibition spaces to attract major touring shows and provide hire space.
A bid has also been made to the Arts Council Small Capital Grants Scheme, while £65,000 has already been secured from the Department for Culture, Media & Sport's Wolfson Gallery Improvement Fund.
Councillor John Reynolds, City of Wolverhampton Council Cabinet Member for City Economy, said: "The gallery is a historic building which has a place in many people's hearts and we want to make these improvements to ensure it continues to be a much loved asset for the people of Wolverhampton.
"We know the café is and has always been popular so we want to create a better space which more people can enjoy, with a bigger kitchen to provide more menu options.
"Last summer for the first time in the gallery's history we hosted London Natural History Museum's Wildlife Photographer of the Year Exhibition, which attracted lots of visitors, many of whom were new to the gallery and the city.
"By moving the café downstairs and opening up the first-floor space we can attract other bigger touring exhibitions like this so people don't have an expensive trek to London to see those kind of blockbuster shows."
If further external funding bids are successful it will enable improved ground floor educational, learning and hire spaces.
Councillor Reynolds added: "This will take the gallery forward and we hope attract more visitors as part of the city's multi million pound regeneration and inward investment."
- released: Tuesday 21 March, 2017