The National Gallery of Australia in Canberra is about to open a new space which, for the first time in the gallery’s history, will be devoted to contemporary Australian art.

The gallery space, separate from the main facility and to be known as the NGA Contemporary, will sit lakeside on Parkes Place and replaces the Gallery of Australian Design, which has been relocated.

The new space opens at the end of this month with a survey of 21st century Australian art in a range of media from the gallery's own collection, including sculpture, painting, video and photography.

The gallery’s outgoing director Ron Radford stated his belief that by installing a contemporary art space, a younger generation of art lovers would be encouraged to visit, criticising what was on offer at the moment.

"The space that we've got for Australian contemporary art is now the most compromised in the country," said Radford speaking to the Sydney Morning Herald. "It was never any good in 1982 when it opened, and since that time, each state gallery has built new galleries of Australian art.

The National Gallery is about to enter stage two of a major redevelopment plan, with a new wing dedicated to Australian art set to be built. NGA Contemporary has been funded by private sponsorship although that cost has not been revealed, while a first stage of development was completed in 2006, with a grand new entrance and a new wing devoted to indigenous Australian art at a cost of AU$92.9m (US$83.4m, €64.6m, £50.9m).

A second stage of development, due to start in 2015, will feature a remodelling of the original building, with art styles dictating the architecture. Further developments are planned, though costs and details are yet to be revealed.