A £160m emergency response package is to be made available to help cultural organisations, freelancers and individual artists survive the coronavirus crisis, Arts Council England has said.

The money is intended to prevent artists and arts organisations from going bust, but is also designed to help them come up with creative responses “to buoy the public” during the lockdown.

The package breaks down as £20m of funds for creative practitioners and freelancers, £50m for organisations not in the national portfolio, and £90m for the 828 organisations in the national portfolio, a category that ranges from small touring theatres to the National Theatre.

The money is coming from a combination of ACE’s emergency reserves and a suspension of national lottery project grants, normally a vital source of income for smaller organisations and individuals.

The ACE chair, Sir Nicholas Serota, said he had been “deeply moved” by the response of artists and cultural organisations to the crisis, praising “their imagination and invention, but also their generosity and their care for one another and their communities”.

“None of us can hope to weather this storm alone, but by working together in partnership, I believe we can emerge the stronger, with ideas shared, new ways of working, and new relationships forged at the local, national and even international level.”

ACE said that the financial crisis for the arts caused by the mass closure of venues and cancelled contracts was acute, with evidence showing it was “causing massive and unsustainable loss of revenues”.

It said the emergency package was designed to complement the financial measures already announced by the government to help the wider economy.

ACE also announced it was delaying the next investment process for organisations who receive regular core funding. The process for 2022-26 was due to begin in the autumn. Instead the current portfolio will be rolled over for an extra year to 2023.

In nuts and bolts terms, the package means:

• Artists and creative practitioners will be eligible for cash grants of up to £2,500 from the £20m pot. ACE is also planning to make grants of up to £4m to existing benevolent funds for cultural workers.

• Organisations outside the national portfolio will be able to apply for grants up to £35,000 from the £50m fund. It is aimed at helping them “to get back on their feet” or to make work in the future, which will mean they can contribute to the “Let’s Create” strategy.

• The £90m programme for portfolio organisations includes advancing current grants by up to six months to help with cashflow. The stringent conditions that normally apply to funding will be relaxed.

ACE said it regretted suspending national lottery grants. “At this time of crisis, we believe that this budget is best spent on sustaining the sector. We will prioritise reopening this stream of funding as early as possible.”

Darren Henley, the chief executive of ACE, said: “Right now, our number one priority is to do everything we can to help individual artists and cultural organisations to stay afloat. It’s going to be tough, but we need them to be in the best possible shape to use their creativity to benefit people’s lives in villages, towns and cities across England once our communities begin the process of recovering from this terrible virus.

“Already, I’ve seen artists and cultural organisations draw on their bottomless ingenuity and creativity to dream up ways to connect, comfort and uplift us as we face these uniquely challenging circumstances.

“This is a frightening time for all of us. But, as we distance ourselves from one another in our daily lives, I believe the role of arts and culture in helping to bring us all together will become ever more critical.”