Part of a £44.6m North Yorkshire Council programme backed by the Transforming Cities Fund, the project would see One Arch and Station Square transformed with new paving, trees, planting and lighting.
Plans also include improvements for pedestrians, a short southbound cycle lane on Station Parade and a new bus lane to access the station.
There will also be additional cycle parking, including covered parking close to the bus and railway stations, greater use of high-quality materials, such as Yorkshire stone paving, and feature lighting.
As part of the project, a series of TROs were issued to enable changes to road layouts, traffic flow and active-travel infrastructure.
Campaign group Get Away brought a judicial review earlier this year, raising concerns about the potential impact of the proposed highways changes on the town centre and the construction period required to deliver the works.
The group argued that the council had not adequately assessed public support, evaluated the scheme’s wider effects, or provided sufficient evidence for the decisions taken.
The High Court dismissed those arguments in August, but the Court of Appeal has now ruled that the grounds submitted ‘have real prospects of success’ and should be considered further.
The appeal will focus on whether the TROs were lawfully made and whether the decision-making process met the required standards for a major urban-regeneration and transport-infrastructure project.
Speaking at the council meeting yesterday, North Yorkshire Council’s executive member for highways and transport, Cllr Malcolm Taylor, said: “The scheme has been in the making for around five years, with several rounds of consultation and engagement to produce the final designs.
“We have maintained our commitment to delivering the scheme, which will be key in promoting sustainable travel and public transport options.
“The town centre will become more visibly appealing, ultimately driving economic prosperity through improved access to employment and future investment.”