An area from Oxford Circus to Portman Street was closed to traffic last weekend as shoppers spilled onto the road because the pavements were narrowed by construction work.
Now the authorities have decided to suspend utility-related streetworks on Oxford Street from today until January 9.
The affected works involve replacement of utility pipes which date back to 1830.
The streetworks are being carried out as part of the £300m contract to revamp Bond Street Station.
Hoardings surrounding Thames Water works will also be removed to free up more space for shoppers.
Pedestrians will also be able to use part of the road with only one lane of traffic allowed.
After January 9, on-street works and hoardings will be reinstated and work will continue until Easter.
Martin Low, Westminster City Council Commissioner of Transportation, said: “These measures will help ease pedestrian congestion along Oxford Street.
“We are committed to ensuring the safety of Christmas shoppers and that they have as comfortable a journey as possible this festive season.
“We welcome these collaborative measures and will be keeping a close eye on them.”