Douglas Promenade plans have been rejected by an independent planning inspector.
It's prompted fresh proposals from the Department of Infrastructure after the Council of Ministers ditched its preferred £21 million redevelopment scheme.
A new strategy will focus on highway refurbishment works between the Sea Terminal and Villa Marina Colonnade and a second phase just past the Summerhill junction.
An additional planning application seeks to create a tram corridor from Strathallan Crecent to the War Memorial - adjoining the Manx Electric Railway.
Horse tram tracks won't be included until the future of the service is decided.
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