However, the cost of residents' relief from the long-running smell could rise to up to $6400 each, based on initial cost estimates.
Councillors at yesterday's infrastructure services committee meeting voted to accept the findings of a staff report, which found odours from failing septic tanks represented a health risk.
Councillors also endorsed plans to begin consultation with residents over options for connecting to the city's reticulated wastewater network.
However, residents would be expected to contribute 20% of the cost - possibly rising to $480,000 - as part of cost-sharing provisions outlined in the council's reticulated utility services policy.
That would see each household paying between $3900 and $6400, depending on the option chosen, a report by council programme analyst Madelaine Wiese said.
A report recommending a preferred option and detailing its cost would be presented to the committee once consultation was completed.
The committee's decision would be confirmed by the full council on November 2.
A plan to cut nearly $10 million from spending on Dunedin's roads over the next three years has also won the support of councillors.
A report by council project engineer Evan Matheson recommended reducing work during the 2009-12 period, as the city faced a $9.4 million reduction in the transportation budget.
The budget was jointly funded by the council (35%) and the New Zealand Transportation Agency (65%), but the agency's decision to cut its Dunedin contribution by 8.5% meant the council needed to act to avoid a funding shortfall, he said.
The cuts would see a combined $9.4 million drop in spending on Dunedin roads during the period.
Councillors accepted Mr Matheson's recommendations, which would see work on some cycleways and bridges - including a Brighton Rd bridge over the Kaikorai Estuary - deferred or rejigged.
About $1.34 million in already-rated funding for 2009-10 would be carried forward, with a decision on how it was spent made during next year's annual plan hearings.
Dunedin's Enviroschools programme will be supported with another $30,000 from the council in 2009-10, following the Government's decision to cut spending on some sustainability initiatives.
Councillors at yesterday's infrastructure services committee voted to increase council funding from $40,000 to $70,000, in response to a cut in the Government's Education for Sustainability funding from $40,000 to $10,000.
Councillors also asked for a report to next year's annual plan hearings on other funding sources in 2010-11, including the Government and the Otago Regional Council.
