CONSTRUCTION of the $4 million Margaret Olley Art Centre at the Tweed River Art Gallery is underway and expected to open early next year.

Minister for Regional Development and Local Government, Anthony Albanese said the federal Labor government was providing $1 million through the Community Infrastructure Grants Program (CIG) for the project to ensure Margaret Olley's legacy lives on.

"The new Centre honours the express wishes of the late Australian artist, Margaret Olley, to re-create her studio and elements of her former home in a purpose-built extension of the Tweed River Art Gallery," Mr Albanese said.

"The Tweed River Art Gallery is one of the country's leading regional galleries and holds works of significant value to the nation.

"The Margaret Olley Centre will make it one of the most recognised regional institutions in Australia."

Once complete the Tweed River Art Gallery is expecting a boost in visitor numbers from around Australia.

Member for Richmond, Justine Elliot attended the sod turning event for the start of construction and paid tribute to Margaret Olley's vision and generosity yesterday.

"Margaret spent part of her early childhood in this area and the new centre will include part of her invaluable art collection and give visitors a unique insight into the life of one of the nation's most acclaimed and beloved artists," she said.

"The federal Labor government's $1 million in funding will be used specifically for the exhibition fit-out and re-creation of Olley House and the design and construction of the building, including the artist-in-residence studio.

"This is an exciting project and the new centre will be enjoyed by generations of Australians who admired Margaret Olley and have the opportunity to see the setting under which she created her precious legacy of artworks."