A new 5,000-seat stadium is to be built at Melbourne Park as part of plans to guarantee that the venue continues to host the Australian Open grand slam tennis tournament for the next 20 years.

Victoria state treasurer Tim Pallas and Minister for Sport John Eren announced yesterday (Sunday) that A$271.55m (£160.7m/€188.9m/$205.4m) would be set aside to complete the third stage of Melbourne Park’s renovation.

It is hoped that the funding will guarantee that the Australian Open, the first grand slam on the tennis calendar, will stay in Melbourne until at least 2036.

The third stage of the development will feature a new multi-purpose, 5,000-seat sunken show court and arena, as well as a central terrace with an elevated outdoor space, a function and media centre, broadcast studios, central kitchen, loading dock and logistics hub.

Other improvements will include new pathways, scoreboards and signage. The project will create 600 jobs during construction.

Work is currently ongoing at the 14,800-seat Rod Laver Arena as part of Stage 2 of renovation work at Melbourne Park. Stage 2 is set to be ready in time for the 2019 Australian Open, with Stage 3 to commence later that year.

Eren said: “Melbourne is the sporting and events capital of the world, and we’ll keep it that way. We’re breathing new life into our iconic venues so we can host more events, and ensure Melbourne remains the home of sport and entertainment.”

The Australian Open is popular among players due to its high standard of facilities and is often dubbed the ‘Happy Slam’.