The water feature – titled The River by sculptor Dhruva Mistry – is part of a raft of changes to the city centre due to be approved by Birmingham City Council’s cabinet.
The works are planned to be funded in part by the introduction of Clean Air Zone (CAZ) charges for highly-polluting vehicles in the city centre.
The fountain reportedly ran up a huge repair bill along with the £3.5 million initial cost, and was turned off in 2013 to be turned into an elaborate flower display.
Now, the fountain is set to be repaired and reinstated as a fountain as part of a £12.4 million first phase of city centre improvements due to begin in the summer.
The fountain will also gain improved security measures, while other parts of Victoria Square will see improved pedestrian areas and pavement widening.
Counter terror measures measures known as Permanent Hostile Vehicle Mitigation (HVM) will also be introduced at seven locations across the city centre.
A second part of the works is intended to see areas around Colmore Row and Waterloo Street made pedestrian and cyclist-riendly by October 2023.
As part of this work, 30 pay and display car parking bays on Colmore Row/Waterloo Street will be removed.
But the council said the £200,000 lost to the council each year as a result of this change will be offset by the introduction of controlled parking zones as part of the CAZ.
The City Centre Public Realm (CCPR) scheme has a total cost of £20.5 million including a second phase due to come before cabinet in the summer.
A total of £5 million for the project is set to come from the Government’s Transforming Cities Fund, the council has said – while the rest are intended to be funded by revenues from the CAZ.
Council leader Councillor Ian Ward said: “Our city centre welcomes more than 42 million people a year and following the regeneration of Centenary Square and Paradise, it’s time for the business and retail areas to be revitalised.
“While improving public spaces in the city centre will enable us offer a world-class welcome to all for the Commonwealth Games, it will also support the economic recovery for businesses impacted by the Covid-19 pandemic.”
Diana the Princess of Wales unveiled the sculpture in 1993, with repairs totalling £410,000 subsequently being needed in 2000, 2009 and 2012.