There was unanimous support from Hobart City Council at Monday's meeting for a motion to revitalise the North Hobart precinct.
Suspending the popular strip's controversial parking meters is also part of the immediate solution, in response to a petition which gathered more than 1200 signatures.
Some traders claimed they'd lost around $5000 a week in turnover as customers were diverted elsewhere by the strip's complicated parking regime.
Lord Mayor Anna Reynolds said balancing the needs of the community in relation to parking was complex.
“We brought in parking meters to address complaints about food delivery vehicles filling up Elizabeth Street parking spots,” Cr Reynolds said.
“We’ll continue working with residents and traders to find the best solutions to help the area thrive.”
Paid parking during peak times was introduced in May as part of a suite of parking changes that included reducing parking fees in off-street parking and making it free after 6pm, and increasing parking time limits in Elizabeth Street to 30 minutes (previously 15 minutes).
The City of Hobart will work with North Hobart traders to develop a marketing campaign to attract more people to the precinct.
Council also voted to lobby the Tasmanian Government to think again on any plans to demolish homes at Dynnyrne to make way for a fifth lane for the Southern Outlet.
Alderman Damon Thomas lashing the government's handling of the project.
"It's not just 17 homes; it's the ones right next door to the 17, adjacent properties," he said.
"We have not seen a proper cost-benefit analysis of economic activity being impelled and propelled in the Kingston area which would alleviate the need for this monstrosity."