The London cinema that hosted the first moving-image film in the UK is to be restored and reopened in a £6m project. The Regent Street cinema, now part of Westminster University, will be given state of the art projection and sound, while its auditorium will evoke its original late-Victorian grandeur.

Sarah Carthew, the university's director of development who has led fundraising, said the cinema will be a world away from the multiplexes of the West End with competitively-priced seats and a programme that would tap into the venue's historic significance.

The building, which fell into disuse as a cinema in the 1980s, is scheduled to open in November next year, with the official launch of the restoration programme taking place on Thursday night.

Carthew said the cinema would provide an educational resource for local schools and film students at the university would be able to show their work. "We'll be the only university in the world to be able to offer that to our students," said Carthew.

Situated just north of Oxford Circus, the building has been the site of many historical events, including early experiments with magic lantern shows, diving bells and electrification.

It was because of this reputation for innovation that in 1896 cinema pioneers the Lumière brothers decided to showed 10 50-second films there. The audience apparently ducked in amazement when they saw an image of a train coming towards them.

It was also the site of first photographic studio in Europe, which was built in 1841 and situated in the roof. Charles Dickens had his portrait taken there.

Less cerebrally, in 1951, it hosted the first X certificate film, Life Begins Tomorrow, which included allegedly racy scenes of hospitals and nightclubs.

"It's one of the most important sites in cinema," said cinematographer Seamus McGarvey, who studied at Westminster when it was the Polytechnic of Central London and is working on Joe Wright's adaptation of Anna Karenina starring Keira Knightley in the title role.

"I love the idea that in the centre of town there will be a place that people can enjoy movies within this incredible historical context."

The auditorium is being used as a lecture hall: McGarvey remembers it as "a dusty old storage space and exam hall with a mixture of multifarious uses".

Over half the money for its restoration has been raised; the university has also approached the Heritage Lottery fund, corporate donors and members of the public.

Generous donors will have the opportunity to have their handprints in cement on the steps of the building, in the style of Grauman's Chinese Theatre in Hollywood.

"If we lose a building like this we lose part of who we are," said film producer Paul Trijbits, who sits on the cinema's advisory board.

"It's a very good use of public money because it will be accessible to groups outside the university . If we let go it's a crime."

• Correction 22/3/12: This piece originally claimed that Westminster University was formerly known as Regent Street Polytechnic. In fact it was called the Polytechnic of Central London. This has been corrected.