Restaurants, cafes and bars in Honiton and across East Devon have been given a much-needed boost after the district council backed plans to issue licences to allow tables and chairs to be set up on pavements and council owned land.

The licensing scheme, which will run until September 2021 was given the go ahead by councillors on Tuesday, the day before the government's Business and Planning Bill was made law on Wednesday.

It will allow customers to maintain social distancing while giving businesses a shot in the arm and allowing them extra space to trade from as they fight to recover from the financially crippling lock down.

And councillors admitted that had the legislation been in place last weekend, it would have saved them the hassle and stress of having to refuse applications for two Exmouth pubs to use part of the Strand and issue them with a £500 fee for use of the land.

East Devon District Council's cabinet on Tuesday backed the recommended approach for dealing with both pavements licences and sitting out licences, for which businesses would be charged £100.

This furniture is required to be removable – not a permanent fixed structure, and is able to be moved easily, and stored away of an evening – and businesses would be required to comply with the existing conditions of their premises licences and can have a licence revoked if they don't.

Henry Gordon Lennox, the council's strategic lead for governance, said that the council can terminate the licence of occupation on notice, saying: "If they breach the licence then we can just revoke it and remove them from the land if they don't comply with the requirements."

The pavements licences would allow businesses to take advantage of the relaxing of the planning regulations linked to pavement furniture and the pavement licence regime and allow them to use public highway land, while the sitting out licence would give similar permission for council-owned land and green space.

Applications will be considered to have been automatically granted unless the council refuses permission within 14 days, and would have to relate to land that is near or adjacent to their existing premises.

Councillor Paul Millar said that he welcomed the measures, and added: "Had we had this last week, it would have spared us the problems that two pubs found due to a legislative regime that is no longer fit for purpose."

The Grapevine and Spoken were both charged £500 for putting tables and chairs in The Strand on the weekend between Friday, July 10 and Sunday, July 12 because neither pub had completed a Temporary Event Notice in time, but under the new legislation, they would have been able to apply and be granted a sitting out licence for the land.

The temporary measure will be in place to support businesses while social distancing measures may still be in place, but will remain in place until the end of September 2021 to give certainty to businesses for the foreseeable future and to support them to operate safely.

An application by a business to the local authority must specify the premises and, the part of the relevant highway to which the application relates, the days of the week on which and the hours between which it is proposed to have furniture on the highway, describe the type of furniture to which the application relates, for example: tables, chairs, and/or stalls and contain or be accompanied by such other information or material as the local authority may require, for example how national and local conditions have been satisfied.

The cabinet unanimously agreed to the process by which applicants would have to apply and that the set fee for an application would be £100.