A £2.2m plan to pedestrianise Parsons Street and part of Market Place in Banbury was given the go-ahead by Cherwell District Council's executive on Monday.

The work could start in 2008, five years after the scheme was first suggested.

The original plan, then estimated at costing £1.5m, included banning of traffic from Parsons Street and the closure of Market Place as a car park.

It also included a 'blue river' - coloured paving blocks running down Parsons Street and through Market Place, a raised stage and fountain near the HSBC bank, and decorative lighting.

The new scheme will retain the Market Place car park without losing any spaces, and will omit the blue river, fountain, and lighting.

George Reynolds, the council's executive member for development, said: "This pedestrianisation has been on the agenda for some time, and we are now in a more stable financial situation than we were when it was first discussed.

"The original scheme caused concern at the loss of the short-stay parking spaces which would have cost the council £1,500 a week in revenue."

Mr Reynolds said: "The work will include resurfacing Church Lane, and I hope the new traffic-free area will become a circular walk for shoppers and visitors and bring new life to shops in the town's old streets."

He wanted the new pedestrianised area to include evenings so that people could enjoy the area's pubs and restaurants without the fear of cars."

Ray Gasson, the council's executive member for resources, said it was a good scheme. He said: "I am always concerned about increased costs, but the council's financial position is strong."

Andrew Fulljames said the scheme would revitalise an old part of Banbury.

Leader of the council Barry Wood said that because of the rise in costs, the decision must go to the full council for approval.

He described the plan as "exciting for Banbury".