The £150,000 move comes a decade after city councillors first raised the prospect of bikes being available to rent on the capital’s streets.
Since then, London launched a scheme in 2010 and Glasgow followed suit with its own version before the Commonwealth Games in 2014, which is to be doubled in size.
Transport for Edinburgh chief executive George Lowder told a conference in Edinburgh yesterday: “I’m confident that at the very least we will start a pilot this year.”
The scheme is likely to complement existing bike hire operations, such as ScotRail’s Bike & Go at stations.
Others include an electric bike hire scheme for Edinburgh University staff.
Nextbike, which operates the Glasgow scheme, is also trialling one for Royal Bank of Scotland staff in Edinburgh.
Mr Lowder told the Policy Priorities for Transport conference that Edinburgh could eventually have five or six schemes rather than a single operation like in London.
Transport for Edinburgh’s new 2017-21 strategy said high cycling rates in areas around Edinburgh University “represents an opportunity to develop cycle hire”. These include Morningside, Newington, Blackford and Merchiston.
The document added: “The east and north of the city - Portobello, Trinity and Newhaven - have established cycle mode share for journeys to work or study and could also be further development communities for the expansion of cycle schemes.”
The city council considered a hire scheme in 2007, but it was shelved because of the cost.
It is understood a firm will now provide the £4 million cost of a scheme as sponsors, like Santander in London.
City council transport convener Lesley Hinds said: “Thanks to the funding available as part of the local government finance settlement, we’ll have more resources to devote to cycling projects and we plan to use some of this extra money for a pilot cycle hire scheme.”
“I’m absolutely delighted we’re going to have a pilot scheme in Edinburgh.
“All members of the transport and environment committee have been keen for many years to introduce something like this to Edinburgh,
“Many cities now have successful bike hire schemes, which help encourage residents and visitors keep active while exploring their surroundings on two wheels.”
Ian Maxwell, of Lothian cycle campaigners Spokes backed the plan if it did not take money from cycle lane improvements.
He said: “The bikes should be widely available and linked to public transport.
“Electric bikes should be included because of Edinburgh’s hilly nature.
“It would mark another stage in being a bicycle city.”
However, Mr Maxwell said the council must be clear as to who the scheme was aimed at, as bikes for tourists would have to be located in different areas to those for residents.
He also warned against council cash earmarked for cycling being “gobbled up” by a hire scheme.