Ms Collier was born in 1885 and died in 1964, and spent much of her life in Wanganui. Her work remained largely unknown until after her death.
Council resource management planner Dave Wan said Ms Collier had a personal connection to the piece of land.
"She lived on this property with her sister, and a number of other members of the family also lived on the property for many years, both prior to and after the passing of Edith and her sisters," Mr Wan said.
He said a representative of Ms Collier's family had no objection to the name being used.
The council's road naming and numbering policy gives priority to a number of characteristics including traditional or Maori names, historical people or events, and significant geographical features.
The developer's name may also used in a new street if none of the above characteristics are present.
WHO IS EDITH COLLIER?
As a schoolgirl, Edith was a talented cellist and artist.
In 1912 she attended art school in London, spent time at summer art classes in Ireland, and in 1920 attended Frances Hodgkins' art classes at St Ives, Cornwall.
She was considered very talented by the time she returned to Wanganui in 1921.
But back home, her work attracted criticism, and her father burned her paintings of female nudes.
As the eldest unmarried daughter, she had become progressively more engrossed in her family duties and painted less.
By the time she died in 1964, many people had forgotten she had been a painter.
