In her report to council Mrs Brazendale said the working party had concluded the square was the best option at this point in time.
"The square is the most visible option for passing traffic and it has enough room to accommodate the expected number of stalls. Holding the market in the square is not expected to result in any adverse impacts on traffic or other businesses."
Any damage to the square could be mitigated by using mats on the grass and the careful placement of stalls, Mrs Brazendale said.
She said council had consulted with the RSA, who were happy for the market to use the square.
"In order to make sure that the market doesn't impact on anyone else's rights it's important the council has a formal agreement that includes protecting those commemorative activities," she said.
The working party recommended council entered into a memorandum of understanding with the market, and include a provision for three-monthly reviews, she said.
As part of this agreement, stallholders would have to park away from the square except when they were setting up and packing down their stalls.
Mayor John Booth asked how much work had been done to investigate other venues.
"I think it's really important that there has been thorough work done on that."
Mrs Brazendale said the market committee had been adamant that Carrington Park was not an option, but if the market ever exceeded the proposed limit of 25 stalls, council would keep it "on the table".
All councillors, except Bill Knowles who voted against, and Mike Ashby who was absent, voted in favour of moving the market into the square.
Market committee member Sara Sutherland said she was pleased with the decision and hoped to get the market up and running again as soon as possible.
Buckhorn Bar and Grill owner John Kennedy said he was happy with the council process and had "no argument" with the market moving into the square, although he believed Carrington Park was the better option.
"I firmly believe that it should be in Carrington Park but I've got no argument about it being over there [Memorial Square]."
He held no grudge against the stallholders but was disappointed with the way the market committee had handled things, he said.
"I'm happy with the council process and I've absolutely got nothing against the stallholders," he said.
"It's only the way the committee have done things."
Council chief executive Jane Davis said she had prepared a draft memorandum which she hoped the market committee would agree to very soon.