However, building the corridor would result in the loss of 65 car parks on Hinemoa and Haupapa streets.
Construction work would take about six weeks and, if NZTA funding is secured, could start early February in time for the world's largest mountain biking festival Crankworx, which is to be held in Rotorua starting March 25.
Rotorua mayor Steve Chadwick, deputy mayor Dave Donaldson and councillors Karen Hunt, Trevor Maxwell, Janet Wepa and Merepeka Raukawa-Tait voted for the proposal while Mark Gould, Peter Bentley, Mike McVicker, Glenys Searancke and Rob Kent voted against it.
Councillors Charles Sturt and Tania Tapsell were absent.
Council staff said the corridor would bring more people into the city, benefiting retailers, and make the inner city easier to access and more attractive to visit.
The Green Corridor project has the full support of Rotorua Cycle Action and the Inner City Focus Group, with many of the ideas taken from a recent public feedback process held in September and October.
Those councillors who voted against the project said they did not think there had been enough public consultation, that a proper investigation had not been carried out, and the council was moving ahead too quickly.
"I don't see too many cyclists riding around with shopping bags," Mr Kent said.
"It's effectively three working days since we sent letters out to retailers about this ... three days is not a consultation process," he said.
Those councillors who voted against the project made it known that they did support the corridor "in principle" but were not happy with what they believed to be a lack of public consultation and a rushed decision.
Mr Donaldson said it would be a huge asset to the city and the council needed to make a decision to make sure they did not miss out on NZTA funding, or the start of major events coming to the city next year, including Crankworx and Trenz - the nation's largest tourism trade event - which will be held in Rotorua in May.
"Cars and people can co-exist in a shopping destination," he said.
"We've consulted on the inner city to death, in previous councils as well as now.
"This is about creating a destination and getting more people into the city."