A group of Travellers who set up camp at Fintry struck an agreement with Dundee City Council to use the site.
About 20 caravans pitched up on Jack Martin Way last week.
They were allowed to use the site after the local authority said it was the preferred location for them to camp, as the council’s official Traveller site at Tealing is already being used by another group.
There is space for 20 caravans at the official encampment but it is currently half-full with inquiries for other bays being processed.
The council usually takes legal action against any group that pitches up on public land, but Councillor John Alexander, the city’s housing convener, said this was a new way of dealing with the Traveller situation.
He said: “As previously set out, the approach taken for decades has failed to make any headway on this issue.
“We will continue to seek legal action on sites that are clearly inappropriate, such as pavilions, football pitches and public parks.
“On a purely pragmatic and sensible basis, the industrial location at Jack Martin Way is preferable to previous locations at Caird Park, Camperdown and Mill o’ Mains I don’t think there can be any argument against that.
“It is further away from the settled accommodation, is within council ownership and allows us to engage with the Travelling community on our terms.”
Mr Alexander added that any further decisions will be taken on a “case-by-case basis”.
He said: “We have more members of the Travelling community than our site can take. We will keep reviewing the situation over the coming days.
“This is not a blanket policy and we are very much looking at how we change things in a positive way. It’s about trying a different approach.”