General parking was now banned in the laneway, as drivers continued to park haphazardly, though some loading zones and disabled spaces would remain.
Group manager district living Paul Dell said fewer parked cars would make the space "friendly" for everyone.
"People had been parking in areas not designated for parking, making it less pedestrian-friendly, increasing the chance of a pedestrian being hit by a vehicle and blocking delivery vehicles out of loading zones.
"Removing these general car parks will make the nature of the area more obvious to those passing through it, in vehicles and on foot," he said.
People were encouraged to instead use the Central City Carpark, entrance off James St, where there was two hours' free parking on the top level.
The light show is from 4pm tonight at the Cameron St Laneway.