Bristol Old Vic will get more than half a million pounds from the Government as part of a nationwide support package to help the arts industry recover from the impact of Covid-19.
Bosses at the theatre said the money, which will come from a pot of £1.57 billion, will be "transformative".
The company lost 75% of its income overnight at the start of the coronavirus lockdown and has not been able to fully recover since.
As well as devastating financial losses, Old Vic bosses announced in July that more than 20 full-time roles were at risk of being cut.
Now the Department for Culture, Media and Sport has announced the theatre will be given £610,466 as part of the Government's Culture Recovery Fund.
Responding to the package, Bristol Old Vic's Artistic Director Tom Morris said:
“This is fantastic news for many arts organisations all over the country. For Bristol Old Vic it is transformative. Immediately, it keeps us open and prevents another devastating round of redundancies.
"Beyond that, it gives us a solid platform from which we can contribute to the economic and social recovery which must follow the pandemic over the next two years."
Mr Morris also said the money will allow team members to reach a wider audience by "developing its digital offer" so people can enjoy live performance from home.
Throughout the lockdown, bosses trialled a digital streaming service for loyal audience members to keep them connected while in isolation. Performances included The Grinning Man and Messiah.
Elsewhere in the South West, Exeter's Northcott Theatre will also be helped by the funding.
Revealing the news on Twitter, bosses expressed their relief.
The Government's £1.57 billion Culture Recovery Fund is for heritage sites, independent cinemas and music venues across the country.