Scores of families packed up picnics and joined the fun and games when a milestone for Bath's industrial heritage provided cause for celebration.

Visitors packed into Sydney Gardens for the Holburne Museum Picnic in the Park on Sunday, celebrating the 200th anniversary of the completion of the Kennet and Avon Canal.

A selection of activities focusing on the heritage of the waterway were on offer including making hobbyhorses and sun bonnets, face-painting, dressing pegdolls, decorating flowerpots and dressing up as 19th-century characters. There was also live music from Bath band The Mandibles and puppetry from the Great Xa's Magic Show – featuring museum director Alexander Sturgis – and vintage swing boats and a bouncy castle.

The event was based around the canal's past, but Sarah Brice, regeneration manager for British Waterways, said the aim was to help raise awareness of the potential the route had for the future.

She said significant restoration was planned: "We are hoping to upgrade the wartime bridges and the chimney in this area of the canal. British Waterways has promised to fund the upgrading of the bridges in November and we hope to be able to raise the money to pay for the structural repairs to the chimney and, with the help of volunteers, improve the stonework and state of the vegetation. We also plan to gather memories people have of the canal from over the years and display them in the Holburne alongside heritage and cultural information about the canal and railway."

The canal, which runs between Newbury and Bath, opened in 1810 and is 87 miles long. In the later 19th century and early 20th century, it fell into disuse following competition from the Great Western Railway but was restored in the latter half of the last century and today is used for boating, canoeing, fishing, walking and cycling.

The museum and gallery, which organised the free event, had been building up to it with summer workshops in its Lodge centre looking at canal art.

The event took place as the attraction is undergoing a £13.8 million revamp to completely refurbish its interior and add a glass extension on to the rear of the building in Sydney Gardens, which is due to reopen next May.

Glen Morris, 45, from Bath, who was at the event with his two daughters – four-year-old Phoenix and nine-year-old Liberty – said: "It is amazing to think how times have changed for the city since the canal opened and what an important part of our heritage it has been."

Cyclist John Keen, 28, said: "From my point of view canal towpaths make the perfect cycling routes. I would like to see more people ditching the car and opting for the greener healthier way to travel, and canal towpaths allow people to try it out away from the dangers of other road traffic."