Plans to create a new public square in East Oxford have been approved by the city council's east area committee.
Restaurateur Clinton Pugh's scheme to introduce street caf culture to the Cowley Road, with a continental-type square off Dawson Street, had split the local community.
But his designs to create a square with trees and space available for markets and fairs has won city council support.
Councillors imposed restrictions on the area of the square that can be covered with tables, to meet residents' concerns about "the privatisation of a public space".
Mr Pugh's Cowley Road businesses Cafe CoCo and the Kazbar are sited on either side of the new square. As well as designing the square, Mr Pugh said he was prepared to pay towards its cost.
But he now has to persuade Oxfordshire County Council, the highways authority, to permanently close the road to traffic to allow the public square to be created.
Mr Pugh said: "I'm pleased with the decision and there should now be a positive outcome for the area. I am prepared to spend money on this project because I would like to see the work done properly."
He hoped that with County Hall approval, work could be under way before next summer.
The square would be paved with natural stone and would be used for an open farm market, community events and antique, clothes and jewellery fairs.
However, the charitable Dawson Trust is expected to submit a planning applic- ation to build three shops, with student accommodation above, on the part of the site behind Cafe CoCo that is occupied by a disused garage.
Mr Pugh's original plans were amended to create a central pathway through the centre of the square, with an avenue effect created by evergreen Italian Holme oak trees.
Instead of being in the centre of the square, tables and chairs will now go on the outside.
Mr Pugh said Cowley Road was badly in need of a boost, with restaurants in the area struggling in the face of fresh competition from the new Oxford Castle site development.
East area committee chairman Craig Simmons said: "I am delighted it has got this far and this first major hurdle has been overcome.
"But there is still some way to go before we can turn the area into a functioning community space."
Mr Pugh had collected 3,000 letters of support for his plan.
Erica Steinhauer, of the Bead Games Shop in Cowley Road, formed the Common Ground Common Sense group to oppose it.
She said: "We are pleased that we have saved this site as a public space.
"The next issue will be about licensing.
Local people do not want it to become a late-night drinking place.
"They would prefer it to be part of the alcohol exclusion zone."
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