Belfast City Council is to provide £100,000 towards the organising of this year's St Patrick's Day parade.
This year's event will take place at Customs House Square
Councillors voted on Wednesday by 25 votes to 24 to organise an outdoor, carnival-type event on 17 March.
The St Patrick's Day Carnival Committee, organisers of the event in recent years, said the move was "a major breakthrough".
In the past, the parade was regarded as contentious with unionists objecting to the presence of Irish tricolours.
Carnival committee spokesman Conor Maskey said: "We would encourage people from all corners of the city to ensure that they flock to this year's event and make it the most colourful, vibrant and carnival-filled to date, so that the argument can be made positively for future years."
In February last year, councillors voted not to grant £30,000 to help fund the 2005 St Patrick's Day parade.
However, in July the council agreed to provide funding for the 2006 parade.
At the time, the council said it had held a series of discussions with the carnival committee and hoped that with substantial council involvement, the event would be as inclusive as possible.
This year's event will be held at Customs House Square near Belfast city centre.
Sinn Fein councillor Michael Browne said he hoped it would be a cross community event.
"What I would suggest to anybody with concerns is to work with the rest of us," he said.
"The important thing at this stage is that this decision went through tonight as it did, but all of us on this council want to see an event that all people in this city can feel comfortable about attending."
However, DUP councillor Sammy Wilson said proposals for a cross community parade were unworkable.
He said that in the past, the day has been hijacked by republicans.
"When the vote was taken tonight, it was on a purely sectarian basis with nationalists voting for what will be a nationalist fest in Belfast city centre funded by the ratepayers," said Mr Wilson.
SDLP councillor Carmel Hanna said she welcomed the decision.