Cars are to be allowed to use Shandwick Place during the night when the tram is operational, following a U-turn by project bosses.
A ban on all traffic on the street was part of the original proposals for when the tram line is built.
But city council chiefs have bowed to pressure from West End residents who were concerned about the impact that traffic would have on other streets and confirmed that they will now allow Shandwick Place to open to general traffic between 8pm and 7am every day.
Officials have also pledged to investigate whether general traffic could also be allowed at off-peak hours from 9.30am until 3pm – but only once the tram is operational, in 2014.
News of the change came as the city council also today confirmed that it will spend £3.2 million on taking away tram-related traffic restrictions on Leith Walk and beyond and reverting the streets to how they were before tram work started.
Councillor Gordon Mackenzie, the city’s transport leader, said: “We took on board comments and representations made around a year ago when we talked to local stakeholders about it and asked for traffic modelling to be looked at to see if we could accommodate overnight opening, and I’m pleased to say it looks like we can.
“It provides flexibility and it will take some of the pressure off other routes. We will look further, after the tram is up and running, and see if there are other parts we can relax.
“There is considerable nervousness about the impact of people stopping on Shandwick Place and holding up buses, and indeed trams, as a result. That won’t be as much a problem overnight but through the day there are greater risks and that is why we will only look at that when the tram is operational.”
A series of remediation and reinstatement works will also take place on Leith Walk, which will result in the street returning to its pre-tram works appearance.
The majority of arts works and monuments will return to their original place, although the London Road clock and Leith Walk pigeons will be moved to a new site at the south end of Elm Row.
The total cost of the works will be £3.2m, which will impact on other council budgets.
A series of “traffic regulation orders” will also be varied to put traffic management arrangements back to how they previously were.
Cllr Mackenzie insisted that the decisions do not kill off hopes of the tram going beyond York Place, but said a decision on when that will happen will be up to a future council administration.
He said: “Our number one priority is successful completion to St Andrew Square.”