Venetians and environmentalists have long voiced concerns about vessels sailing close to the city, which is in a fragile state, and potential damage to the shallow lagoon and canals.
Under the new rules, which follow a temporary limit imposed three years ago, the largest ships weighing 100,000 tonnes or more will sail via the industrial port of Marghera instead, the Guardian reports.
Venice mayor Luigi Brugnaro said: “We want it to be clear to Unesco and the whole world that we have a solution.
“This takes into account all the jobs created by the cruise industry, which we absolutely couldn’t afford to lose, and we can start to work seriously on planning cruises.”
Infrastructure and transport minister Graziano Delrio said work needs to be done on the new route, which will open within four years.