News: work has begun on a redevelopment of Budapest's Central European University by Irish firm O'Donnell + Tuomey, winners of this year's RIBA Royal Gold Medal (+ slideshow).

Dublin-based O'Donnell + Tuomey are collaborating with Hungarian architectural and engineering firm M-Teampannon on the project to refurbish and extend Budapest's Central European University (CEU) – a US- and Hungarian-accredited graduate school specialising in social sciences and humanities.

The €34 million (£24.7 million) plans include a five-storey library, a cafe and an expanded auditorium that will host music performances as well as lectures.

The university's academic and administrative services are currently split across rented and owned property on both sides of the Danube River. The redevelopment will consolidate the university into a single 35,000-square-metre campus spanning six historic buildings in downtown Budapest – a UNESCO World Heritage Site.

To satisfy the requirements of Budapest's Monument Authority, elements of the existing structures will be retained to preserve the architectural character of the area, which includes remains the Roman city of Aquincum and the Gothic castle of Buda. New structures will also be added to expand the facilities.

Renders of the project show a new atrium featuring a faceted brick facade, similar to the architects' extension for the London School of Economics, which was shortlisted for the European Union's 2015 Mies van der Rohe Award for architecture earlier this week.

Inside, red staircases climb through a large atrium topped by a sharply pitched glass roof. Roof gardens will skirt this structure and continue onto adjoining campus buildings.

The existing auditorium will be restructured, while new public gathering areas will better equip the university to host public events, conferences and performances.

The library, which the university claims houses the largest English-language collection in Central Europe, will be expanded across five floors to create 450 individual and group study rooms, a multimedia suite and a cafe.

The project will be completed in three phases, with the first expected to finish in 2016 to coincide with the institution's 25th anniversary.

Funding has been secured for the first two phases of the project from Market-Strabag – a consortium of companies specialising in the construction of educational buildings.

Studio founders Sheila O'Donnell and John Tuomey received the Royal Gold Medal for architecture at a ceremony earlier this month, recognising projects including the Lewis Glucksman Gallery and the Lyric Theatre.

In an exclusive interview with Dezeen, the pair spoke out against current procurement methods in Europe, claiming there needs to be more opportunities for young architects. "European regulation has, sometimes, a very stifling effect on creativity," said O'Donnell.