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The $300,000 project, to move the Arun and Tyne St intersection, included in the council's annual plan, was intended "to address a potential traffic conflict between new vehicle access being constructed by McKeown Group to Arun St and the Harbourview Rest Home".
The realignment is also needed to create one of two Oamaru Harbour sites the council advertised as available for developers to bring accommodation to the area.
In December, at a public-excluded council meeting, the council directed chief executive Fergus Power to negotiate with a preferred developer for one of the two sites.
No further details have been available since.