Despite a lack of support in ratepayer surveys and questionnaires, councillors agreed the town had waited long enough for improvements to the main retail area.
Chief executive Charles Hakkaart said the project had been discussed for many years, and had previously progressed to the stage where landscape plans had been drawn up and intensive public consultation undertaken.
But when the costs were considered, the project was shelved.
"While some submitters to this plan indicated that they felt the project was too expensive, councillors felt the main-street project had been in the too-hard basket for too long."
Deputy mayor Hamish Anderson said something had to be done.
"You only have to drive around other parts of the country to see that Balclutha, and other parts of this district, have fallen well behind when it comes to the appearance of their main street," he said.
A main-street upgrade for Balclutha was well overdue and there would never be a cheaper time to undertake the work, Mr Anderson said.
The project is still at the ideas stage and extensive public consultation will be undertaken over the next two years.
The construction stage of the project is proposed to begin in 2012-13.
The project will be funded 80% by Balclutha ratepayers and 20% by ratepayers across the district.
Mr Hakkaart said that it appeared from submissions some Balclutha ratepayers were unaware they were already contributing towards the main street.
A medium value property already paid about $27 a year, and when the improvements went ahead in 2012-13 this would rise to about $58 a year.
