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The newly redeveloped cycleway in Portobello Rd between Portsmouth Dr and Timaru St has been praised by cycle advocacy group Spokes, local businesses and council staff.
The approval comes after the initial changes in 2014 prompted an outcry from businesses, and the council came in for widespread criticism for the failed introduction of cycleways across South Dunedin.
Spokes Dunedin chairman Robert Thompson said the revised cycleway was much better than the initial one, which confused road users.
''What we have got now, it looks like a cycleway and the roadway looks like a roadway.
''It just makes sense to everybody,'' Dr Thompson said.
He said it showed cycleways could work if ''done properly''.
''We just need to be thoughtful about it.''
Acting transport group manager Richard Saunders said the revamped project cost $625,000, about $25,000 under budget.
The council would use the underspend on improved landscaping and planting at the Timaru St end.
''I think the outcome is very good and I agree that it shows that if we take the time to design and speak to all of the users then we can get a good result.''
The council would take lessons from Portobello Rd as it worked on opening cycleways in the central city and then South Dunedin.
Options for the central city were still being looked at, but the next piece of work would likely be a cycleway linking the West Harbour shared pathway with Dunedin Railway Station.
Storage King manager Tristan O'Callaghan, one of many business operators who had concerns about the original Portobello Rd plan, was happy with the outcome.
It was ''so much easier'' for road users to understand and the median strip gave people turning space, which was a big issue with the previous design, Mr O'Callaghan said.
However, he would have preferred to have more off-street parking.