The boats have long been a source of frustration to locals, who have protested against the pollution and potential damage to fragile historic buildings and the canal itself.
And cruise ships are also a key factor behind the rise of mass tourism to the lagoon city, which has meant that on a given day, there are more visitors than residents in the city. This has pushed up rents and seen traditional, artisan businesses replaced with shops selling fast food and cheap souvenirs.
Now, an Italian government committee has decided that ships weighing over 55,000 tonnes will have to moor in the industrial port of Marghera, northwest of the historic centre of Venice. This means they will no longer be able to access the Giudecca Canal, which passes next to St Mark's Square.
Mayor Luigi Brugnaro said the decision was "extremely positive" because it had managed to find a compromise between environmental and residents' concerns, and "the jobs created by the cruise industry, which we cannot afford to lose".
"We want it to be clear to UNESCO and to the world that we have a solution," Brugnaro added, referring to warnings from the cultural heritage organization that the city could be listed as 'threatened' if it failed to take measures restricting cruise ship access.
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The new route will be open within four years' time, Italy's infrastructure and transport minister Graziano Delrio said, confirming the plan first announced in July this year. He said the changes would not interfere with commercial traffic.
In recent years, frustrated Venetians have staged frequent protests against the mass tourism which has pushed up rents and forced many families out of their hometown.
Brugnaro has made tackling overcrowding a priority, and has introduced measures ranging from promotion of the lesser-explored corners of the city to the installation of people-counters at the most popular sights, as well as 'locals first' policies on water buses. And this summer, the mayor's office gave the go-ahead to a ban on new tourist accommodation in the historic centre.
The cruise ships have been a particular target of these protests, with groups such as the 'No Grandi Navi' (No big ships) organization staging demonstrations. The group organized an unofficial referendum in mid-June, in which almost 99 percent of those asked voted to ban the vessels from the lagoon.