The bus corridor at Dublin's College Green will be lifted during evening rush hours for two months following a vote by city councillors.
Councillors also agreed to provide nearly 1,400 free parking spaces to encourage people to shop in the city centre.
Dublin City Council proposed to ease the restriction on private cars following complaints by city retailers that evening trade had dropped by up to 30% since the bus corridor was introduced last July.
There are 13 businesses in the process of taking a High Court action over the issue.
City manager John Tierney said this evening that it was impossible to say if the bus priority scheme had accelerated a decline in city centre activity.
However, he said the council wanted to protect business and jobs as much as possible, especially during the Christmas shopping season, which accounts for 40% of all trade.
A number of councillors, including Fianna Fáil's Jim O'Callaghan, accused the council of giving into pressure from businesses without any conclusive proof that the corridor was damaging trade.
However, Labour Cllr Andrew Montague said he would prefer to 'win the war rather than the battle' and get the full bus corridor back in January.
The corridor will be lifted in the evening rush hour from 18 November to 15 January.
Nearly 1,400 on street parking spaces in the city centre will also be free from 2pm on Thursday, Friday, Saturday and Sunday from 18 November to 27 December. (Free parking area below)
Croke Park parking ban vetoed
Dublin city councillors have also voted against the introduction of a 2km parking ban around Croke Park on match days.
A report from council officials said the scheme would cost €200,000 to set up and €84,000 a year to run.
A number of councillors, including Labour’s Aodhán Ó Ríodáin, voiced concern about the cost of the cordon and the practicality of enforcing it.
However, Fine Gael's Mary O'Shea said to reject the cordon would be to allow the GAA to do nothing about the problem facing local residents.
Mr Tierney said he would prefer not to have to resort to laws to deal with the issue.
He said the President of the GAA and the Assistant Garda Commissioner are both willing to meet with local residents.
Councillors voted by 30 to 17 to reject the proposed parking ban.
