Princes Street will be closed to traffic for six months in 2009
Princes Street is to close to all traffic for six months next year while Edinburgh's tram tracks are laid.
Transport Initiatives Edinburgh (Tie) confirmed hundreds of buses a day will be forced to use an alternative route along George Street from January 2009.
The cost of building line 1a, which will run from Newhaven to Edinburgh Airport, has also risen by £10m to £508m, it has been revealed.
Tie said the rise was due to the fall in the pound's value against the Euro.
The tram infrastructure work, to be carried out by Bilfinger Berger Siemens (BBS), will start on 1 June. Construction is due to finish on 17 January 2011.
Trams are not due to be running on line 1a, often referred to as "Edinburgh's backbone", until 3 May 2011.
A spur from Haymarket to Granton, known as line 1b, was put on hold when the tram plans were scaled back in 2006 amid fears that costs were spiralling out of control.
Tie has now announced it is "committing" to line 1b.
Line 1a will have 11 miles (18km) of track, nine substations to power the trams, 22 tram stops and a single depot at Gogar.
Phase 1b would have almost 4 miles (6km) of track, three substations and nine tram stops.
Rob Winter, of the Princes Street Traders Association, said retailers had been aware of a possible closure and had expressed concern about how deliveries would be made to major stores on Princes Street without loading bays at the rear of their premises.
Willie Gallagher, chairman of Tie, said: "We are at the cusp of delivering what we have promised - a world class public transport system in our capital.
"We have struck the correct balance between price, programme, quality of the finished product and certainty of cost in agreeing this programme.
"The start of the infrastructure work will see the nature of the construction change - with rails being installed and the trams stops built."
The contract will see an extension of the hours of working for contractors from 0700 BST to 1900 BST Monday to Saturday in response to the wishes of Edinburgh's business community.
Neil Renilson, chief executive of Transport Edinburgh Limited, the company that will run the integrated bus and tram network, said: "During the ongoing construction period we will continue to plan diversions carefully in close collaboration with our colleagues in Tie and the Edinburgh City Council in order to ensure minimum disruption to bus journeys."
Councillor Phil Wheeler, Edinburgh Council transport convener, said: "It's an exciting time and brings us yet another step closer to a fully-integrated public transport network befitting a capital city.
"I commend Willie and his team at tie for the work that's gone in to planning this stage, which will ensure the city remains open for business while tram work takes place."