EDINBURGH'S Princes Street will re-open for buses, taxis and bikes this Saturday as tram construction work moves into its next phase, creating fresh traffic problems east of the city centre.

The famous thoroughfare will open west of Waverley Bridge after 10 months of work to re-lay botched tram tracks, with the re-opening of the Mound to general traffic also expected to help ease congestion, it was announced yesterday.

But construction work at York Place, the new terminus of the eight-mile tram route after it was shortened to save money, is expected to create further traffic chaos affecting motorists, bus passengers and business from July 14.

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It will require the city's main bus station to be re-located for more than a year. Industry body the Confederation of Passenger Transport (CPT) claims this will create disruption for operators and cause service delays.

Business leaders similarly complained that an expected downturn in trade in the east end of Edinburgh as a result of the construction work could hit retail outlets already struggling with the recession.

The Federation of Small Businesses (FSB) said it was extremely worried that traders in the east of the city would face similar disruption to that experienced by businesses around Haymarket and nearby Shandwick Place.

A recent survey found that footfall on Princes Street was down by nearly a quarter in April 2012 compared to a year earlier as buses were diverted, though George Street saw footfall increase by one-third.

Gordon Henderson, senior development manager for FSB Scotland, said the council's Open for Business fund, worth nearly £1 million over two years, was suffering from "confusion" about who was in charge after it was set up to help firms affected by tram works.

"Many west end businesses have either struggled or not survived the closure of Shandwick Place and major disruption to Haymarket and there has been much confusion about the Open for Business fund and who controls it," he said.

Sue Bruce, chief executive of City of Edinburgh Council, said she was confident the next phase of road closures could be managed effectively.

"Throughout the tram works, people have adapted quickly to the new traffic systems and bus diversions once they have had the chance to bed-in," she said.

"This is a significant work package in the programme and its implementation is in itself a clear indication of continuing meaningful progress.

"The bus station will be required to be temporarily re-located later in the year. This will happen following the conclusion of detailed discussions with bus operators and bus station management. We have managed a similar relocation before and are confident this process will be a relatively smooth transition."

Details of the road closures are yet to be finalised, though they are expected to affect York Place until the end of 2013.

A spokesman for CPT Scotland said: "We welcome the re-opening of Princes Street but are mindful of the likely disruption that the closure of York Place and the relocation of the bus station will bring.

"It is paramount that the council engages with operators at the earliest opportunity about such disruptions."