The new two-time-level dispersion improved CABARET scheme is developed as an upgrade of the original CABARET for improved wave propagation modelling in multiple dimensions and for nonlinear conservation laws including gas dynamics. The new upgrade retains many attractive features of the original CABARET scheme such as shock-capturing and low dissipation. It is simple for implementation in the existing CABARET codes and leads to a greater accuracy for solving linear wave propagation problems. A non-linear version of the dispersion-improved CABARET scheme is introduced to efficiently deal with contact discontinuities and shocks. The properties of the new linear and nonlinear CABARET schemes are analysed for numerical dissipation and dispersion error based on Von Neumann analysis and Pirrozolli's method. Numerical examples for one-dimensional and two-dimensional linear advection, the one-dimensional inviscid Burger's equation, and the isothermal gas dynamics problems in one and two dimensions are presented. © 2017