The curtains will stay up at the national theatre of Ireland after it announced plans to stay at its famous Dublin inner city site.

The Abbey Theatre has purchased a building on Eden Quay overlooking the Liffey, next to its Lower Abbey Street home.

Controversial moves to the GPO, Carlton Cinema site and Dublin Docklands had been mooted over the years.

Theatre director Fiach Mac Conghail said it was a proud day for all involved and a testament to the vision of its board and management team.

"We have purchased this site next door so that we can redevelop, at some point in the future, a new building for the Abbey on our own site," he said.

"The Abbey Theatre is an iconic building in Dublin city. A theatre has existed on this site since 1834.

"Taking this opportunity to purchase this site now is a commonsense solution to securing the future of the Abbey Theatre."

The Abbey Theatre was founded in 1903 by WB Yeats and Lady Augusta Gregory.

It opened its doors a year later and has since hosted many of the world's most famous stars of the stage and screen.

In 1925, it became the first ever state-subsidised theatre in the English speaking world, but within a year was the scene of riots when the audience took exception to the interpretation of Irish history in Sean O'Casey's The Plough And The Stars.

The original buildings were damaged by fire in 1951 but moved back to its current home, designed by Michael Scott, 15 years to the day.

Management believe the 1966 building is inadequate for visitors, actors and staff, as well as lacking disability access and health and safety standards.

It was recently forced to temporarily relocate to the O'Reilly Theatre in Belvedere for nine weeks when asbestos was discovered in the ageing auditorium.

Patrons will return this week to see The Picture Of Dorian Gray on the Abbey stage as part of this year's Dublin Theatre Festival.

Arts minister Jimmy Deenihan said that after years of speculation, the long-term location of the Abbey Theatre was absolutely settled.

"The Abbey Street location is now, and will be for the future, the home of the National Theatre," he said.

"I welcome the acquisition of property beside the existing theatre building as a clear road map for the future, and believe that the fundraising focus of the Abbey must now be on delivering the maximum amount of private support possible to allow for development to take place on this site over time."

Mr Deenihan warned the fundraising challenge could not be underestimated.

"I have allocated additional resources for the Abbey this year to help deal with the asbestos issue at the building, but in the time ahead the level of taxpayer resources that are available for the theatre will - as is the case with all institutions - be under very serious pressure," the minister added.