Major pop and rock acts could be performing in Leicester again after plans were revealed to build a venue.

The redevelopment of the University of Leicester's students' union building will include a 1,700-capacity live music hall.

It will rival Nottingham's Rock City, which caters for a similar-sized audience and is the destination of choice for most of the biggest touring acts when they come to the East Midlands.

The £15m plan is the latest part of the university's £1bn project to redevelop its campus and will see the original Percy Gee union building completely redesigned.

A venue of this size has been missing from the city since De Montfort University's Arena – a favourite of the late DJ John Peel – closed in 2003.

The Charlotte, which put on gigs to a capacity audience of 400, closed in January.

Ambalavanar Kumaran, deputy chief executive of the Students' Union, said he hoped the new building would attract leading bands to the city and provide a centre for other events.

He said: "The music venue will make Leicester one of the primary locations for touring bands in the country and will be open to everyone in Leicester."

Music fans have welcomed the news that the city is to get larger music following the closure of the Charlotte.

Jon Young, 30, from Leicester's West End said: "This could put Leicester back on the map and might make bands feel they do not have to go to Nottingham all the time. If Kasabian can sell out De Montfort Hall three nights in a row, that shows that people here like music and a new venue would be well received."

Hannah Doyle, 25, from Queniborough, said: "Losing the Charlotte was a bitter blow for music in the city, so it's good to see money being put back into enticing the big names back here to play."

Chris Kettle, 31, from Syston, said: "All that is left in Leicester is De Montfort Hall, but it is too big for some bands. I think we do need a music venue, my only question would be is it the right place?

"I think we really ought to have it in the centre."

The building is the latest university development to be announced after the £32m David Wilson Library was opened by the Queen in December.

The students' union building, named after the university's first pro-chancellor and benefactor, Percy Gee, is one of the oldest on campus.

The venue, expected to open in September 2010, will increase the capacity for live performances at the university by 500.

The centrepiece of the building will be a central atrium and courtyard area providing a social space at the heart of the building. It will also include shops, cafes and advice centres.

Professor Helen Atkinson, chairman of the development project team, said: "Students everywhere are coming to university wanting more than just a degree.

"They are concerned about the whole lifestyle of being a student, from the particular bands that have gigged at the union right the way through to whether the university has FairTrade status. What is dubbed the student experience is in the higher education spotlight."