After feedback from the community, stakeholders and existing city centre residents and businesses, adjustments to the design have been made.
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The upgrade will see "improvements" on 1st Ave and Devonport Rd and an upgrade of the laneway between Elizabeth St and 1st Ave.
Parking will be changed to a parallel arrangement on both sides of the street to allow more room for socialising, street performers, and places to relax at the south end of the city centre.
The laneway upgrade will provide a thoroughfare and active interface with the Farmers development in the future.
Pedestrians and cyclists will be prioritised and 1st Ave and Devonport Rd will be upgraded with line marking, speed reduction measures, and other safety upgrades.
Water and wastewater renewals and upgrades are required around the block and will take place along with stormwater improvements.
Community services general manager Gareth Wallis said there would be long-term benefits from the upgrade.
"Upgrading this part of our city provides amenity the city centre is lacking at the moment and sets us up for future development opportunities," he said.
"This is a long-term investment for our businesses and people."
He said the majority of feedback received from the community, stakeholders and existing city centre residents and businesses supported the upgrade councillors agreed on today.
Following today's decision, the council will now progress to detailed design and continue to work closely with affected businesses throughout the next phase of this project to minimise the impact of the planned works.