Ladywell businesses have won concessions from the council over a pro-cycling policy which would have seen them banned form using pavements outside their shops.
A 500-signature petition had urged Lewisham Council to rethink the ban on shops and cafes using the footpath outside their premises for A-boards, tables and planters.
The ban came shortly after Ladywell Village businesses endured months of overrunning roadworks, leading to several shop closures.
And Deputy Leader Councillor Alan Smith has admitted in a written response that the pavement ban was "somewhat heavy handed".
He wrote officers should now "take a pragmatic approach that should allow businesses in question to use the space outside the shop whilst still allowing access for the path users."
Tony Major from the Ladywell Village Improvement Group said: "It's a little step forward. It was worth kicking up a fuss."