Recording studios, rehearsal rooms and a small concert hall in St Luke's Church will be linked up electronically to classrooms and other arts centres across the country, after the LSO received the grant from the Arts Council.
The orchestra, based at the Barbican, runs one of the biggest education programmes in the country and its players regularly help out in workshops for children.
St Luke's, a grade 1 listed building which dates from the 18th century, was bombed in the Second World War but remained open until 1959, when it was declared structurally unsound.
Now the building is to be sound-proofed so that recordings can be made throughout the night. The project is due to be completed in 2001.
Culture Secretary and local MP, Chris Smith, said: "This is terrific news. The new use of the building will be to provide rehearsal and performance and teaching space for the orchestra, and they will be able to expand their education work."
Meanwhile the Unicorn Theatre, in Westminster, a specialist children's theatre, has been awarded Pounds 30,000 of lottery money to help it move premises, Artskills, in Liverpool, which offers education and training to young people, was given Pounds 18,000.