The present ban covers Balclutha's main street from the Night and Day store on Essex St to the intersection of Wilson Rd and Clyde St, and other small lengths of side streets and public spaces.
From Saturday, August 2, the ban area will include the Cromer St playground, Cromer St from Yarmouth St to Essex St, and Yarmouth from Cromer to Essex, as well as Paisley St between Renfrew and Lanark St.
Council planning and regulatory manager David Campbell said the resolution to extend the liquor ban followed consultation with potentially affected neighbours, as well as the wider community.
The extension was initially proposed after police raised concerns about people drinking and gathering at the Cromer St playground, and near the courthouse in Paisley St.
This led to associated problems such as littering, disorderly behaviour and disturbance to nearby residents.
Extending the liquor ban would give police greater powers for enforcing against consumption of alcohol in those public places under the council's Regulatory Bylaw 2008, Mr Campbell said.
"Some of the submitters also called for a total liquor ban across Balclutha.
''However, this was not able to be implemented as it had not been consulted on, nor has council received any significant feedback that it is a problem across the rest of the town.''
The council would continue to monitor the situation.
It was working closely with other agencies to address alcohol-related harm across the district.
Signs and appropriate advertising of the changes would take place before the ban came into effect.