Labour Party councillor Joe Costello said that while "there is still some distance to go", he is optimistic a solution will be found following a meeting with Lord Mayor Hazel Chu, senior council officials and members of the Henry Street Christmas Traders Committee yesterday.
"I argued strongly for the need to continue the great tradition of Christmas trading on the street this year despite the Covid-19 pandemic," Mr Costello said.
On Monday, he tabled a motion at the November council meeting calling on the chief executive to rescind his decision to ban casual trading on Henry Street this Christmas due to the Covid-19 pandemic.
The motion urged the council to "explore all options to allow casual trading on Henry St this Christmas while ensuring that all protocols and precautions re public health are observed".
"We made some good progress and are considering a number of options.
"Hopefully we will find a workable solution but there is still some distance to go."
Plans to ban the Christmas stalls from operating this year over public health concerns were met with shock and anger from stall owners as well as the public, who felt it was unfair as indoor shops are expected to reopen when the current lockdown is due to expire on December 1.
Normally, around 60 traders ply their wares during the run-up to Christmas, however it's understood that only around 40 are considering doing so this year if they are allowed.
Sadie Grace (65), who has been selling lights and decorations at her stall on Henry Street every year before Christmas since she was 13, said she was disappointed at the decision.
"This is the first year I won't be there," she said.