The capacity increase is planned to allow promoters to sell 10,000 more tickets, and to also accommodate 10,000 more staff and backstage personnel.
The plans were revealed by the festival's Operations Manager Melvin Benn, although local Mendip District Council said they have, as yet, not received an official application from Glastonbury's organisers.
Glastonbury founder Michael Eavis said they planned to make 2007 the biggest year yet for the music festival.
Although 173,000 would be the biggest official Glastonbury attendance, it is a significant drop in numbers from the estimated 200,000 that attended in 2000, when 'fence-hopping' was at its most rampant.
Since ex-Homelands organiser Mean Fiddler took over festival operations, the number of fence-hoppers and ticket touts dropped significantly.
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