Ratepayers survey results were mixed on the subject and council staff had recommended the project be deferred, but most councillors believed an upgrade was long overdue.
A common theme of the debate as the council considered its long-term council community plan was that the main town of the district needed to look better.
Original plans for an upgraded main street were first released nearly 20 years ago but rejected because of the price tag.
But the mood yesterday largely supported an upgrade.
Councillors said if the council deferred the project any further, the cost would keep rising and the main street's appearance would continue to deteriorate.
Deputy mayor Hamish Anderson said the main retail area looked "a wee bit shabby" and an upgrade was needed.
"This is long overdue and we need to get on with it."
Similar comments were expressed by Crs Bruce McCorkindale, Jeff Seymour, Bruce Volweiller and Mary Johnstone.
Exactly what will be done is yet to be decided and the council plans to spend the next two years consulting and deciding what improvements will be made.
Construction would not start until 2012-13.
The costs will largely be paid by Balclutha ward ratepayers, who will contribute 80%, and the rest of the district will pay the balance.
