Melbourne city councillor Richard Foster said there was overwhelming support to extend smoke-free areas following a test in one of the Australian city's bustling laneways, called The Causeway.
"I think we're going to actually attract people to Melbourne by being one of the first in the world to go smoke-free," he told Fairfax Radio.
"I think there's overwhelming support to progress smoke-free areas given the great success we had with The Causeway."
Under the plan, it would be illegal for pedestrians, footpath diners and even building site workers to light up in public areas within the central business district unless they are in designated shelters.
Lord Mayor Robert Doyle said any policy change should be incremental in the build-up to being completely smoke-free by late 2016.
"If we can show traders and businesses, just as happened in pubs and restaurants, that this doesn't detract from your business... then bit by bit we will win that battle," he told the Herald Sun newspaper.
Australia already has some of the toughest tobacco laws in the world, with firms forced to sell cigarettes in plain packets largely covered with graphic health warnings.
Smoking is currently prohibited in restaurants, bars and most other indoor spaces around the country.
The percentage of smokers in Australia has dropped from about 50 percent in the 1950s to 15 percent now and the government is aiming to push it down to 10 percent by 2018.