Councillors were due to vote on the £165 million project in December, but the decision will now not be taken until a meeting of the full council in March.
The council said the delay was to allow more time for checks to ensure the bids received to build the 4.6km extension were robust.
And it insisted the move had nothing to do with calls for a decision to be postponed until Lord Hardie publishes the report of his inquiry into what went wrong with the original tram project.
The council said it was seeking best and final offers from the bidders and clarifying specific elements of the bids received before completing the final business case for the project which would be presented to elected members.
Transport convener Lesley Macinnes said: “We have adopted a very thorough and robust process for the Trams to Newhaven project throughout, learning crucial lessons from what went wrong previously.
“We have been very clear from the outset that we will not bring forward the Final Business Case for tram until we have vigorously tested the cost and time estimates with the market.”
Vice-convener Karen Doran added: “It is important for the council to have sufficient time to undertake due diligence and comprehensive evaluation of the final submissions and we have therefore decided to take extra time to allow this process to take place.”
The public consultation on details of the project, which was due to end this weekend, will now be extended until November 11.
The council says a completed tram line to Newhaven would transport almost 14 million passengers in its first year of operation, more than double the number using the current Edinburgh Airport to York Place service.
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