Parks manager Gordon Bailey said the two cemeteries had ''limited space'' for new interments and it was now appropriate for the council to begin developing a 3.1ha site - divided into three separate blocks - in Lower Shotover Rd into an operational cemetery.
The council bought the site for a future cemetery in 1990 and planted several trees at that time.
Those trees now formed the underlying structure from which a proposed layout plan had been developed. That plan was approved at yesterday's meeting.
The layout plan for the first block maximised space suitable for interments, and a circular roadway minimised the distance caskets would need to be carried and also allowed for expansion into the second and third blocks.
Provisions had also been made for both ash and traditional burial areas with associated seating and ''contemplation areas''.
Mr Bailey said ash plots had been designed to allow a commemorative plant to be planted behind the plots, with a children's area also set aside.
''It is proposed to add approximately 60 trees and shrubs over time to block one.
''An option exists for some of these trees to be made available to be purchased as memorialisation trees.
''This would essentially see a family purchasing a tree and installing a plaque in front of it in memory of loved ones.''
While the plan had been ''traditionally based'', there was flexibility for the cemetery to cater for interment options ''other than the traditional form'', he said.
''Others are crypts, bigger lots, plaques and lots of decoration on them - things like that.''
The council had allocated $60,499 in this year's budget, which was being used to ''tidy up'' block one.
In the 2013-14 year the council proposed to allocate $107,000 to be used to prepare the roadway and get the site ready to allow burials to take place.
The layout indicated the capacity of block one would be 492 burial plots and 509 ashes plots.
''Based on the current combined burial statistics for both Queenstown and Frankton Cemeteries, there should be sufficient interment plots for the next 50 years and a similar time frame for the ashes plots.
After the meeting Mr Bailey told the Otago Daily Times it was hoped the cemetery would be completed in about 12 months.
