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Construction is to start about November on the project, which features a separated cycleway in Albany St.
Detailed designs will be developed after public feedback about the concept.
The cycleway is to run from the harbour shared path to Minerva St, Anzac Ave and into Albany St.
Dunedin City Council transport strategy manager Nick Sargent said the Albany St connection project had developed from talks with various groups.
"This connection will improve cycling and walking access to both the city and tertiary area for a large number of people," Mr Sargent said.
Concept designs include new crossing points and traffic calming measures in Albany St and changes to parking.
Construction of a separated cycleway would result in the loss of about 70 parking spaces on the northern side of Albany St and near the intersection of Anzac Ave and Minerva St.
"To help offset this, we are proposing to create additional parking on sections of Leith, Clyde and Riego Sts," Mr Sargent said.
"This means these streets, or at least part of them, will need to be made one-way to allow space for angled parking."
The council’s regulatory subcommittee is set to decide in July or August on parking changes.
University of Otago spokeswoman Tanya Syddall said the university supported the plan.
"The concept of connecting the existing harbour shared path with a cycleway on Albany St goes a long way to creating a safe route for cyclists and pedestrians accessing the campus area and beyond every day," she said.
Bus routes and stops might also change from next March.
"The Albany St connection project provides a wonderful opportunity to improve the public transport infrastructure in this area," Otago Regional Council transport manager Doug Rodgers said.
"We are hopeful this work will encourage public transport use and link in well for journeys partly undertaken by foot or bike using the new pathways in the surrounding area."
The project is part of the Shaping Future Dunedin Transport package developed by the city and regional councils and Waka Kotahi NZ Transport Agency to offset traffic disruption associated with construction of the new Dunedin Hospital in the central city.
The feedback period for the concept ends on June 20.
Development of the harbour shared path to Port Chalmers is continuing.