It is arguably one of the most overlooked, least-known establishments in Manchester: an atmospheric 218-year-old library on top of a city centre pub in a building that resembles an ancient Greek temple.

To find the Portico library people have to know where they are going. The entrance is not the building’s main one and visitors have to trudge up several flights of stairs, but once they get there, what a sight: it is a book-lined step back in history where you can almost hear the echoes of 19th-century Manchester radicals debating Corn Laws.

Big things are being planned for the “hidden gem”.

“We hate the side entrance, we hate the buzzer, we hate the stairs, we want to change all that,” said librarian Thom Keep.

Portico library has secured £453,964 in national lottery money to develop a £7m plan that will transform the library. The ambitious plan includes creating dining and exhibition areas, opening a “northern bookshop”, expanding educational activities, creating a new collections care lab and creating event and meeting spaces.

The Portico opened in 1806 after members of Manchester’s professional classes jealously watched the opening in 1802 of the Lyceum library in Liverpool.

They liked what they saw, including Thomas Harrison’s Greek revival architecture, and essentially asked him to do the same thing, on a smaller scale, on Mosley street in Manchester.

The copying of Liverpool did not stop at architecture. The Lyceum had a prominent wind dial where there might have been a clock, which made sense as ship and dock owners needed to know about wind speeds and directions. It perhaps made less sense in Manchester, but Liverpool had one so the Portico has one too. “They were massively obsessed by the weather,” said Keep. “We’ve also got a very old barometer over there with mercury in it.”

In total, 400 Manchester businessmen became early members, giving money for the library to be built and the first books to be bought. Early members included John Edward Taylor, who founded the Guardian in the wake of Peterloo, and Richard Cobden, the radical Liberal statesman and co-founder of the Anti-Corn Law League.

The membership included doctors, lawyers, merchants and factory owners – men who made their money and reputation on the back of the lucrative and exploitative cotton trade.

“They were looking for a collective space for knowledge,” said Keep. “The opening mission statement was about the diffusion of knowledge … they were trying to democratise knowledge.”

The Portico is seen as having played an important role in the 19th-century information revolution and mostly thrived until after the first world war, when it faced closure because of a reduction in members and money.

The survival plan, by the architect Joseph Sunlight, was to sell books and reduce the size of the library. The lower floors were occupied by the Bank of Athens and the library continued in its eyrie. Later the lower floors were occupied by a NatWest branch and today the Bank pub is located there.

The plan now is to reclaim the lost spaces, reuniting all three floors for the first time in 100 years.

For one thing, it really does need the space. Most of the 25,000 books lining the walls are in a sorry state and in desperate need of conservation but there’s not enough room for a separate, dedicated space to do this. Conservation instead takes place on a table at the back of the main room.

But it is about more than just space. Keep believes the Portico has untapped potential. He says the library has been serving food and drink to people since 1807 and still does today. “It’s the oldest lunch spot in Manchester.”

He adds: “People in Manchester really care about wanting to understand the 19th century. It was deeply complex and complicated for good things and for terrible things and people want to know about it.

“Most of our collection is 19th century so we can work with people to tell stories in different ways.”

Securing such a large amount of money from the National Lottery Heritage Fund is a significant achievement and has not been easy. Keep says the detailed funding process was essentially developed for national organisations. “It was daunting and it almost broke us.”

The money allows the library to trial plans for what is an undeniably bold capital development project. It will also have to secure £2m of funding from other sources.

John Carpenter, the chair of the Portico library, said it was a “visionary” project that “fulfils our mission of working with the many people in Manchester to explore, share, and celebrate their diverse stories and the city’s literary and global heritage”.

He added: “Embracing creativity, collaboration and inclusivity, the project will unlock the library’s past to plan for the future.”