Narberth Museum has welcomed the judging panel for the Art Fund Prize for Museum of the Year 2013 to West Wales, giving staff the opportunity to show them why the museum should win the prestigious award.

The judges were treated to a two-hour visit, including a tour of the museum that took in a craft and storytelling workshop for schoolchildren. Many of the volunteers who run the museum on a day-to-day basis were on hand to show the judges around and convey their enthusiasm for the collection and the building.

Stephen Deuchar, chair of the judges and director of the Art Fund, said: "A highly enterprising new museum project, transforming a beautiful old commercial premises into a thriving heritage centre, imaginatively equipped to meet the needs of local communities of both the present and the future."

Bob and Roberta Smith, contemporary artist, said: "Narberth Museum is about local people's reminiscences and cherishing material culture whilst quietly inventing a revolutionary model for running and sustaining vibrant local museums."

Sarah Crompton, arts editor at the Daily Telegraph, said: "Small is beautiful when it comes to Narberth. It is a great achievement to have opened a purpose-built building in which to display a collection of sharp relevance to the town's recent history. Then to use it to tell the stories of the place and link those to contemporary life is imaginative and impressive. This is a museum that does social good on a small scale and the respect and love in which it is held is shown by the volunteers who help to run it. I am really pleased to have been there."

Stephen Deuchar, Bob and Roberta Smith and Sarah Crompton were joined by fellow judges, Bettany Hughes, broadcaster and historian, and Tristram Hunt, MP.

Tristram Hunt, MP, said: "Narberth is a gem of a museum - a small, delicate, terraced temple to the past with a remarkable range of artefacts. It's a museum in transition, a place embedded within the community, and its innovative approach to the materiality of the past has a good grounding in scholarship."

As well as the £100,000 for Museum of the Year prize, Narberth Museum is also in the running for the Clore Award for Learning, an additional award of £10,000 which recognises achievements in learning programmes in UK museums. Both winners will be drawn from the 10 finalists.

The winner will be announced live on BBC Radio 4's Front Row from the award ceremony at the V&A in London on June 4.