The funding means that the five-day programme of science, arts and heritage events can now stage an evening of major outdoor arts events from leading arts companies.
With events in and around Grantham to celebrate Sir Isaac Newton's close links with the area, Gravity Fields is this year celebrating news of a special curtain raising presentation from Professor Brian Cox.
For 2018 the festival is taking the theme of Voyages of Discovery, based on the 250th anniversary of the HMS Endeavour sailing to Australia. On board with Captain Cook was Lincolnshire botanist Sir Joseph Banks, like Newton a President of the Royal Society.
ACE funding allows Gravity Fields Festival to continue its tradition of arts excellence, said Council Leader Cllr Matthew Lee.
"We have been massively supported by the Arts Council ever since our inaugural festival in 2012," he said. "That funding has allowed us to build a reputation for innovation in the arts and for delivering an outstanding creative experience for everyone to enjoy in Grantham."
"Our 2018 grant allows us to be bold, and to engage with world class artists. I have seen the plans and I know it's going to be simply spectacular. We attracted crowds in excess of 18,000 two years ago to our Saturday night spectacular and we are confident that people will be back in similar numbers, and similarly enthralled."
"We are very fortunate to call on the extraordinary association of this area with Newton's scientific achievement, enabling our 2018 festival to launch a new voyage of discovery.
The story of Banks' voyage on the Endeavour will shape an unforgettable festival evening spectacle on Saturday night conjuring up images of the travellers, astronomy, exploration of the high seas and the amazing plants of the new world.
Carnival company Shademakers will recreate HMS Endeavour's journey along the High St, and the outstanding French light artists T-I-L-T will plant a Garden of Light outside the Guildhall.
In the 'port' area of the Market Place, high in the rigging, Gorilla Circus will present a world class aerial show.
A fire sculpture of the Transit of Venus will appear outside St Wulfram's Church thanks to External Combustion, with Luke Jerram's Museum of the Moon inside.
Hundreds of community participants from schools, colleges and community groups will create gardens of the New World and perform alongside the professionals.
Peter Knott, Area Director, Arts Council England, said: "Gravity Fields is a unique festival which fuses arts, heritage and science to inspire and entertain people of all ages.
"We hope people will make creative discoveries of their own as they celebrate Lincolnshire's history, explore HMS Endeavour's journey to Australia and remember one of the world's greatest thinkers, Sir Isaac Newton. Projects like this are made possible through National Lottery funding and it is fantastic to see Gravity Fields reaching so many people."
Tickets will go on sale and the festival web site will go live on 3 April. Tickets for festival events at Meres Live are already on sale on www.guildhallartscentre.com and Grantham Guildhall box office
Saturday 22 September - Professor Brian Cox with Robin Ince
Wednesday 26 September - Science Museum Big Space Show - Primary School and Family Performances
Saturday 29 September - Sun and Space, including Britain's First Astronaut Helen Sharman and other guests.
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