Council infrastructure group manager Erin Moogan said the work was on hold as further investigations were undertaken.
Progress in Esk St had stopped last week when an unknown substance was discovered among archaeological material and soil excavated from the site.
The items were tested and early results had identified the materials contained low levels of cyanide and a mix of heavy metals.
"Work has now been stalled as we undertake further investigations and testing but the community can feel confident that the identified contaminants in Esk St do not pose any risk to public health," Ms Moogan said.
"The level of contaminants is low and we have strict health and safety measures in place," she said.
"Environmental consultants are on site to undertake further testing and examination and we are working through the processes and environmental consent requirements to ensure any contaminated materials are handled in the appropriate manner."
It was likely this process and subsequent requirements would mean works would be significantly disrupted until some time in January, and the project and milestone dates might also be extended.
The works have already disrupted businesses in Esk St, as the street has been shut off to traffic since August.
Neighbouring Retailers Association chairman and Shoe Clinic owner Ben Fokkens said any delay in finishing the project might be offset when the inner city development mall car park opened in May or June.
While foot traffic was down since works began, people were destination shopping which meant fewer browsers and more buyers, he said.
McKnight and Brown owner Bernie Brown said he hoped businesses could make up for lost time once work resumed.
"Because to have two Christmases out of action would be a bit frustrating," he said.
