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Sydney Lord Mayor Clover Moore said the move recognized the "essential gay, lesbian, bisexual and transgender character of Oxford St" and was a response to gay men who had written to her about homophobic abuse at nightclubs, said news.com.au.
Sydney's gay media routinely run stories of homophobic abuse in Oxford St and the gay community has worked with police for several years to try and reduce abuse along the strip.
The council will consult with police, the Aids Council of NSW and other community groups to develop the strategy.
The move could require local businesses to use signs and stickers to declare their premises homophobia free and to include anti-homophobia measures in staff training.
Sydney city councillor Phillip Black, who proposed the plan, said the idea was similar to alcohol-free or nuclear-free zones that already exist in the city.
"At this point, the ball is with council staff to develop a proposal that will come back to council over the next few months, but it could involve stickers, badges, posters and T-shirts similar to the Safe Place pink triangle campaign," Black said.
"We have to create awareness that homophobia is not acceptable," he said.
Sydney Drag Queen Maxi Shield, a City of Sydney Oxford Street Safety ambassador, welcomed the idea but called for more police on the street to protect gays.
"More education in anything doesn't go astray, but we need both awareness and more police," Shield said. "We need more police presence and safety measures, not just putting a label on it."
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