This comes after complaints from environmental groups, protests from local residents, and warnings from UNESCO which has labeled the fragile city of Venice as at risk from deterioration by large ships as well as the millions of tourists which swarm into the popular city.
Italy's transport minister announced this week that Venice will ban all cruise ships from entering the city center.
Big ships pose a threat to the city's precarious ecosystem, and have continually upset locals, who feel their presence spoils Venice's scenery.
The new navigation route will involve big cruise ships entering the Venetian lagoon from the Adriatic through an inlet far to the south of the one now used.
The building works which must take place are expected to take between three and four years.
Instead, they will sail through the Venice lagoon at a distance from the city, cut through at Malamocco (on the far end of the Lido, where the controversial Mose flood barrier is located), and dock on the mainland at Marghera, the industrial centre of the Veneto region.
That move came after the Costa Concordia disaster in January 2012, which increased pressure on the authorities to keep liners away from the central Giudecca canal and St Mark's Basin.
The Mayor of Venice, Luigi Brugnaro, said that the decision found the right balance between combating a city increasingly overcrowded with tourists and keeping the positive impact of cruising alive in the city's economy.
"We want it to be clear to the United Nations cultural agency (Unesco) and the whole world that we have a solution", Brugnaro said after the meeting of the governmental committee charged with saving Venice.
It's not a uniquely Venetian problem either-other historic cities around Europe are also becoming victims of their own success.