Councillors at yesterday's full council meeting instead voted to explore ways of encouraging greater public use of the lower Octagon for this summer.
A report expected to outline options for a pedestrian-only trial in the area would instead become part of wider work to update the council's central city plan work, which was under way.
That would include considering the way future trial closures, more public seating and other temporary changes could be carried out in the central city, councillors decided.
A report outlining the financial requirements of doing so would also be prepared in time for next year's long-term plan budget hearings.
The changes were suggested by Cr Aaron Hawkins in response to a report to yesterday's meeting by council acting urban design team leader Dr Glen Hazelton.
Councillors earlier this year had supported a call by members of the public to consider options for a trial, which if approved was to begin next February.
However, Dr Hazelton's report instead recommended a ''do minimum'' approach in the meantime, amid concerns a rushed trial could be costly, and potentially backfire, without proper investigation.
Dr Hazelton told yesterday's meeting he was ''not opposed to a trial per se'', but it needed to be done properly.
A delay would give more time to consider any trial as part of a ''holistic'' approach to wider central city planning, he said.
If the council pressed ahead with a rushed trial ''in isolation'', there was a risk of a flawed process that alienated people and ''which might shut down some options in the future as well'', he said.
In the meantime, the council had ''tens of thousands'' of dollars available in its street furniture budget which could be used for temporary seating, children's play equipment or other temporary improvements, he said.
Cr Hawkins, deputy chairman of the council's planning and regulatory committee, said he accepted it would be difficult to stage a ''meaningful'' trial this summer, but he did not want it to be delayed ''indefinitely''.
It was understandable some retailers and landlords were anxious about change, but Cr Hawkins said he, too, was anxious about the future of the central city.
The council was often accused of failing to do enough for businesses, but pedestrianisation could help in an area where retailers were struggling, he believed.
''We are fast coming into a situation where 'for lease' signs are our growth industry,'' he said.
Dunedin Mayor Dave Cull supported the moves, saying the area was ''incredibly important'' for retailers and their clients alike - ''and they have a symbiotic relationship''.
He was hearing from business owners expressing both concern and support about changes in the area, but concerns about the city's retail environment showed something needed to happen.
''I don't think doing nothing is an option ... Clearly, we have to do something.''
As part of that, councillors agreed with Mr Cull more communication was needed with central city stakeholders to seek a common understanding before changes were considered.
Cr Richard Thomson said the council needed to define what it planned to trial, for how long, and what it hoped to achieve, before consulting retailers.
That would allow them to share their views on ''something known'', rather than ''hypothesised'', and help the council get the trial ''right'', he said.
Simply putting down road cones, seats and planter boxes ''to me is not a trial at all - it's a waste of time'', he said.
''Getting a trial right to me becomes really important,'' Cr Thomson said.
Other councillors also spoke in support of the approach, including Cr John Bezett, although he warned Mr Cull's suggestion would be a ''huge undertaking''.
''I think we are creating a rod for our own back.''
