The Capital Children's Museum will close its aging facility by year's end and try to raise millions of dollars to build one of the nation's premier museums for young people two blocks south of the Mall, developers and city officials involved with the project said yesterday.

The new National Children's Museum would open by early 2008 at L'Enfant Plaza, a complex of federal buildings sandwiched between the Mall and Interstate 395 that is slated for a major makeover. It would aim to draw many more of the millions of tourists who visit Washington each year as well as more local visitors, city officials who have been briefed on the project said.

For 25 years, the museum has operated behind Union Station in a 19th-century complex built as a Catholic convent and home for the poor and elderly. Those buildings are under contract to developer Jim Abdo, who said he plans to restore their architecture and turn them into condominiums.

Kathy Dwyer Southern, president of the children's museum since 2001, would not discuss the plans before a briefing for employees at a staff meeting, scheduled for this morning. An official announcement is planned for tomorrow.

Southern supervised the planning and opening of Port Discovery, an interactive children's museum in Baltimore that was built after a $35 million capital campaign but has struggled to break even and meet attendance projections since opening in 1999.

Experts on museums aimed at children say that the number of such institutions is exploding -- from 38 in 1975 to about 230 today. And developers and city officials said they believe that a new facility in the District would help draw energy to an area of the city now populated mostly with federal workers on official duty.

"L'Enfant Plaza needs help. It's all this stark, abandoned plaza," said D.C. Council member Jack Evans (D-Ward 2), whose district includes the site. "It needs some life to it. It needs to be a destination point for people."

Developer JBG Cos. of Chevy Chase bought the 900,000-square-foot complex -- which includes several nondescript office buildings, a vast plaza and the 370-room Loews L'Enfant Plaza Hotel -- in November. An executive at the firm said yesterday that the purchase price was about $200 million. The site sits atop the largest station in the Metrorail system, a few minutes walk from the Mall and the Southwest waterfront, where several other projects are proposed, including, possibly, a Major League Baseball stadium.

Brian P. Coulter, a partner at JBG, said the company is working with architect Caesar Pelli and plans to spend $200 million to $300 million over the next five to 10 years to renovate the L'Enfant Plaza buildings, bring underground shops up to street level and add more office and retail space and perhaps residential units.

"We think we can create a much more pedestrian-friendly kind of environment. Right now, it feels a bit isolated," Coulter said. A new children's museum, he said, "will increase the foot traffic and help put people on the street. It will help make the area a more vibrant place."

Plans should be completed over the next six months, Coulter said, and construction could start early next year.

The Capital Children's Museum, a 10-minute walk from the Union Station Metro, has always struggled to build its reputation. Although fairly popular among school groups and as a place to have birthday parties, it competes for attention with the larger, family-oriented Smithsonian museums and does not draw the crowds that the Boston Children's Museum or other nationally known facilities attract.

In the past decade, youth museums have been one of the strongest sectors in the field, said Janet Rice Elman, executive director of the Washington-based Association of Children's Museums. Since 2000, there have been 24 new ones, and 80 are in the planning stages.

The push to reopen the children's museum as a new facility comes at a time of expansion and vigor in the regional arts community. More than a dozen groups have opened facilities recently or have announced plans for major additions. The Clarice Smith Center for the Performing Arts at the University of Maryland, College Park, and the Rachel M. Schlesinger Concert Hall and Arts Center at Northern Virginia Community College are opened; yet to come is a new building for the Shakespeare Theatre, the Woolly Mammoth Theatre Co. and two performance spaces at the Studio Theatre. The John F. Kennedy Center for the Performing Arts is planning two new buildings, and the Corcoran Gallery of Art is adding a Frank Gehry-designed addition.

Area fundraising experts said the region's economy can probably handle all the fundraising, but the money probably will flow more slowly than it did in the 1990s.

The Capital Children's Museum has been looking for a new site for several years. Its board had expressed interest in relocating to the Southwest waterfront, near Arena Stage, on a parcel that is a key part of the District's Anacostia riverfront redevelopment project.

But the waterfront plans have been slowed by disputes between the city's office of economic development and the publicly chartered National Capital Revitalization Corp. over who should control the Southwest properties.

Several developers who sit on the museum's board of directors have known the principals at JBG for decades. Shortly after JBG purchased the L'Enfant Plaza site -- several blocks closer to downtown than the site near Arena stage -- discussions with the museum began, developers and city officials said.

Ted Carter, chief executive of the NCRC, said those in charge of the Southwest waterfront will have to search for another cultural institution to draw people there.

"We'll have to find something as or more exciting than a children's museum that has that type of velocity," he said.

As for the current museum complex at Third and H streets NE, its transformation into condominiums would be a boost to the revitalization of the H Street corridor, just north of Capitol Hill. City planning officials last year recommended the site for housing.

Real estate prices have soared in that neighborhood in recent years, and longtime residents are likely to call for a portion of the new residences to be set aside for people of low to moderate income.

Staff writers Daniela Deane and Jacqueline Trescott contributed to this report.

The Capital Children's Museum building, near Union Station, is under contract to a developer, who plans to create condos.The Capital Children's Museum has always had to compete against the larger Smithsonian features for attention. A major fundraising effort would be needed for the new building.