Councillors and traders are close to agreeing a compromise over the contentious issue of A-boards in Stamford town centre.
Stamford Town Council agreed to form a working group to explore the problem earlier this month.
The move came after the council sent a letter to town centre traders threatening legal action if they did not remove their A-boards.
Traders were outraged and Stamford Town Team chairman Tim Lee branded the council “totalitarian”.
But after much discussion the council backed down and agreed to work with traders to find a solution.
The working group is now in the process of drawing up a definitive policy on A-boards.
Town clerk Patricia Stuart-Mogg said: “We had a very positive meeting with retailers, traders and the chamber of trade.
“We are working towards putting together a definite code of practice and seeing how that will fit with both the county and district authorities.
“Hopefully that will be in place soon.”
Mr Lee, who is also president of Stamford Chamber of Trade and Commerce, initially suggested adopting a similar A-board policy to that used in Bristol.
He said the meeting with town councillors had been “good and productive”, adding: “They have agreed to negotiate with us the draft code already supplied and then they want to get the district and county councils to give Stamford traders a blanket planning permission, provided they stick within the guidelines of the code.
“We need to let all town centre businesses have sight of the draft code and have the opportunity to comment, before adopting the official version.”
A key point of debate has been whether different rules should be applied to retailers in Stamford’s lanes and the High Street.
Mr Lee said: “The needs of businesses in the lanes have been recognised and we are looking for a solution that avoids several A-boards clustered at the entrances to the lanes.
“It is suggested that the most practical solution and the easiest to implement would be to have one over-sized A-board listing all the businesses in each lane. This would avoid problems with listed buildings and would also be highly visible to passers-by.
“Any other practical suggestions are welcome.”
The working group, which comprises Couns Christine Brough (Lib Dem), Mike Exton (Con), Maureen Riley (Lib Dem) and Gwyneth Gibbs (Con) and several retailers, will continue to work on the draft code.