The Tate Modern is to open the first phase of its new wing next year in time for the Cultural Olympiad celebrating the 2012 Games, the London gallery announced.

The Tate Modern will open the former power station’s oil tanks, two giant circular spaces that were hitherto left derelict.

They will become the lower levels of a new 11-storey building on the gallery’s southwest corner, to be completed in 2016.

The inauguration of the first phase coincides with the London 2012 Festival, which runs from June 21 until September 9, and will be the climax of the Cultural Olympiad, the programme of events surrounding the London 2012 Games.

The Tate Modern has already collected 70 per cent of the £215 million (€245 million) required for the project, said Lord John Browne, the Tate’s chairman of trustees.

The Oil Tanks, measuring 30 metres in diameter and seven metres high, will be “some of the most exciting spaces for new art in the world”, according to the Tate.

The tanks, which once held one million gallons of oil, will be able to accommodate giant installations, as well as host performances and projections. “Arts have started to move to the massive scale, and we have to provide spaces for that,” said Tate Modern director Chris Dercon.

Britain’s national gallery of international modern art was founded in 2000 on the south bank of the River Thames opposite Saint Paul’s Cathedral. It claims it is the most popular modern art museum in the world.

In its lifetime, its collection has swelled with the acquisition of new art. The gallery initially expected two million visitors a year but now welcomes five million.

The new wing – designed by Swiss architects Herzog and de Meuron, as is the current exhibition space – will be connected to the main building on three levels.

When the extension is finished in 2016, the Tate Modern will have 70 per cent more space for exhibitions, education and social events, along with new gardens and a spectacular terrace with panoramic views over the Thames.

“We always knew that we were going to extend Tate Modern,” said Tate director Nicholas Serota.

“There’s been a degree of anticipation.

“Art has changed, the way which public expects to relate to that art is definitely changing. The extension reflects all this.”