SQW Consulting was asked to assess a range of areas of the council's economic development department and a consultation with partner groups led to some stinging criticism of the "string of pearls" project.
The consultants said that there was a high level of concern among city business and public sector groups about the project and called on the council to provide more signs of the scheme leading to action.
The city's economic development leader today said he was not happy about the amount of progress being made on improving the street.
The "string of pearls" project was first mooted by council officials in 2007 as a way of ensuring that each block on Princes Street could be developed in an interconnected manner. A blueprint for how the development could happen was then produced.
But the tough economic conditions are said to have reduced investor interest.
Councillor Tom Buchanan, the city's economic development leader, said: "One of the challenges facing us is that there are so many owners and stakeholders on Princes Street. I fully acknowledge and accept that people will say we could do more, and more quickly."
He said that the council was trying to generate interest in turning some of the unused upper floors into flats - although he admitted current market conditions may delay residential development.
Cllr Buchanan said: "I'd like to encourage developers to look at the upper floors not just for hotel use but also as apartments. One of the things that would improve Princes Street is if it became more of a living street, where there is more ownership by residents, and that would help improve it."
The consultants' report called on the council to make clear what it wanted to deliver and reflect the level of concern about the project among stakeholder groups within its own reports. The wider summary of the economic development department found that most groups believe it is "doing a good job" and "generally working well with its partners".
Groups asked for views on the project included Essential Edinburgh, Edinburgh Chamber of Commerce, Scottish Enterprise and Scottish Development International.
Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, said: "The string of pearls idea, where you take advantage of leases becoming vacant and develop in a piecemeal fashion, is fairly sound. The difficulty is there are too few people putting money into property.
"There needs to be some movement. For me, the string of pearls is just not right for this time.
"We need sweeping change and we need a plan that shows not just what will happen but when it will happen. But how that can happen is the difficulty in these economic times."