The council's economic development committee yesterday approved a staff recommendation to preserve and display the causeway in situ, at a cost of $310,000.
The alternative option was to rebury the causeway at a cost of $40,000.
The council would now work with the Historic Places Trust to identify and access funding from non-council sources.
It is likely an approach will be made to the Government.
Mayor Peter Chin told the committee Prime Minister Helen Clark had phoned him shortly after the causeway was discovered.
"She was aware of the project and she wanted the assurance that council will look after it," he said.
The Wall St development is expected to be completed by early March, with overseas tenants expressing concern in recent weeks that the discovery of the causeway might delay the project.
Any further delays could have caused retailers to withdraw from the development, project manager Dave McKenzie said.
"But, at last, we have a decision and this means we can move the project forward . . ."
The developers now face a major task to incorporate the causeway into the design and make it available for public display.
The initial cost to preserve the site was $310,000 and would include driving sheet piling around the edges of the causeway, up to 8m below the site, to protect it from any flood risk from the old creek bed.
Ongoing conservation could cost $100,000 a year for a five-year period, bringing the total cost to $840,000, he said.
Historic Places Trust Otago Southland area manager Owen Graham said the recommendation was a "fantastic decision".
The trust and the council would work together to investigate funding opportunities, he said.
The causeway, which is believed to date from the 1850s, was a find of national importance and would be an asset for the city, Mr Graham said.
The recommendation is still to be ratified by the full council.
