Rising costs of constant repairs and an inability to source replacement parts for the system are behind the move to replace the system, which Warrnambool City Council's director of corporate strategies Peter Utri said probably dated back to the 1980s.

This year alone, the cost of repairs is already $20,000.

The unstable system was preventing Warrnambool from hosting works from other galleries, and put the current collection at risk, city councillors say.

Cr David Owen told this week's council meeting that the air-conditioning system had been a problem for as long as he could remember.

Cr Owen said there was no doubt Warrnambool would probably get a new gallery in the next 10 years but the upgrade was important to protect the city's collection.

"The artworks are of significant importance," he said.

Cr Owen said the city was missing out on opportunities to display artworks from other galleries.

The council's manager of financial services David Harrington said the new air-conditioning system would allow exhibitions from places like the National Gallery of Victoria.

"They've got quite strict regulations about where they'll display their art," he said.

"If we don't do it we'll miss out on those types of exhibitions."

Mr Utri said the gallery had to keep the temperature and humidity within a certain zone in order to maintain the integrity of the collection.

"The system needs to be replaced. It's a large area and large building, so it's not like a house," he said.

Warrnambool's entire art collection has been valued at $11.7 million but that includes the $4 million Loch Ard peacock which is housed at Flagstaff Hill.

Cr Kylie Gaston said the city needed to protect its large collection of artworks by replacing the ailing air-conditioning system.

"It's sad the cost of current maintenance is blowing out year after year," he said.

Cr Mike Neoh said it would be very embarrassing if moisture or damage occurred to artworks in the gallery.

Mayor Tony Herbert said he had spoken to people who were interested in donating substantial works to the gallery but they were concerned about the ability to provide long-term correct storage.

A report to council said the gallery's system was currently operational as a result of emergency works, except for the humidifiers because parts were no longer available.

A total of $745,000 has been allocated for the upgrade which also includes extra funding for lighting in the temporary gallery.

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The collection will be placed in storage during the project which will shut the gallery's doors from October 1.

Gallery director Vanessa Gerrans said it would reopen in January 2020 with "an exciting suite of new exhibitions".

She said the gallery took its role as custodians of more than 130 years of art history very seriously.

"During the closure we will continue working on special projects, developmental work for exhibitions and the 10-year vision and strategic plan for WAG," she said.

The gallery is also planning a gala event for later next year.

Ms Gerrans said some of the artworks would be displayed at Flagstaff Hill Maritime Museum, the Eugene von Guerard's Tower Hill piece would be sent to the Art Gallery of South Australia while Hugh Ramsay's The Toper will go to the National Gallery of Australia for an exhibition.

She said while the Warrnibald would not run this year, it would be back bigger and better next year.

For artists who have already started their paintings, the parameters would be extended to allow those works to be entered in next year's event.

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