A traffic order is to be introduced in the Lawson Place shopping area of Moreton Hall.
It will restrict parking to three hours on weekdays and Saturdays and to four hours on Sundays.
The decision follows a meeting last month into the outcome of trial parking arrangements aimed at freeing up spaces for shoppers.
It was attended by councillors and representatives from local businesses and the church.
A spokeswoman for St Edmundsbury Borough Council said: “This will now be progressed and is likely to come into effect before the Christmas peak period.”
Employees will be able to continue to use their permits to park in the nearby council-owned Heldhaw Road car park, which will be improved with better lighting and the tidying of landscaping.