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The Dunedin City Council will assess whether it takes up a Government offer to expand footpaths and roll out temporary cycleways, to help people keep 2m of physical distance post-lockdown.
Council infrastructure services general manager Simon Drew said the council would look at the options with councillors in coming weeks.
"Providing increased walking and cycling infrastructure aligned with the council’s strategic goals, including promoting mode shift and reducing Dunedin’s carbon emissions to net zero by 2030."
Last year, city councillors voted to declare a climate emergency and accelerate efforts to become a net-zero carbon city by 20 years, to 2030 instead of 2050.
Cycleways around the city have been developed in recent years to ensure safety and encourage people on to their bikes.
Associate Minister of Transport Julie Anne Genter made the announcement of government funding on Sunday, saying it would come from the Innovating Streets for People pilot fund.
"When people begin to return to city centres following the lockdown we want them to have enough space to maintain physical distance," she said.
"Some of our footpaths in busy areas are quite narrow.
"Temporary footpath extensions mean people can give each other a bit more space without stepping out on to the road."
Councils could use highly visible plastic posts, planter boxes and other materials to create temporary separated bike lanes where people felt safe.
"It’s now up to councils to put forward projects if they want to take advantage of this initiative.
The New Zealand Transport Agency would help councils to implement the changes.
"Councils can apply now for funding from the NZ Transport Agency, who will cover 90% of the cost of rolling out temporary changes to the streetscape."
The Innovating Streets for People pilot fund supports projects using "tactical urbanism" techniques such as pilots and pop-ups, or interim treatments that make it safer and easier for people walking and cycling in a city.
Cities including Berlin and New York have rolled out temporary cycle lanes and footpaths in the wake of Covid-19.