Burgos Mayor Javier Lacalle said he now planned to establish a working group to try and build community consensus for the stalled project.
He said works would be stopped for the time being. Without specifying an exact time frame, he suggested this would be for a minimum period of two to three weeks.
The mayor's comments in the wake of a fifth day of sometimes violent protests against a planned main street redevelopment in the normally tranquil Spanish city of Burgos.
Police have arrested 40 people since the nightly demonstrations began on Friday, as protesters burned garbage containers, smashed windows and tore down security barriers.
Opponents of the street revamp say it is a waste of money that could be better spent on social services during an economic downturn that has left one in four people in Spain out of work.
Dozens of people gathered from Tuesday morning in the centre of the northern city to try to block work on the redesign, which has a price tag of €8 million ($11 million) and will reduce free parking spaces.
A bigger mass rally was planned for Tuesday night.
"Nobody wants this project. What people here are demanding are public daycare places," Francisco Cabrerizo, the spokesman for the Neighbourhood Association of Eras de Gamonal, where the street is located, told news agency AFP.
The plans for Calle Vitoria include reducing the lanes of traffic to just one each way instead of two, adding a bike lane and green spaces and replacing free parking spaces with a paid underground car park.
Lacalle argues the project will improve the quality of life of the 170,000 residents of the city, known for its dark-stone old town and castle and a statue of the medieval adventurer El Cid.
Cabrerizo said the project will not build enough underground parking places to replace the ones that will be removed and that the new spaces will be sold for nearly €20,000.
"Obviously the street will be very pretty. But the adjacent streets will not be able to support all the traffic," he added. "It will be chaos."
On Tuesday the mayor of Madrid with Spain's ruling conservative Popular Party condemned what she labelled as "attacks" in Burgos.
"Citizen protests are one thing, and are always acceptable, but violence is another thing altogether," said Ana Botella.
Botella's comments came after Spain's Secretary of State for Security Francisco Martínez said the riots had been "infiltrated" by "itinerant" violent gangs.
Botella refused to comment on this issue, but the Spanish edition of online news site Huffington Post on Tuesday reported that 11 of the 13 people arrested in clashes in Burgos on Saturday were residents of the city.