City transportation officials can proceed with their plan to ban cars from five blocks of Manhattan’s 14th Street, a court has ruled.

The appellate-court panel ruled 3-2 Friday against West Village lawyer Arthur Schwartz’s bid to stall the project.

The city’s “busway” plan — which would still allow delivery and local residents’ vehicles along the stretch of 14th Street — was initially slated to launch July 1, before Judge Eileen Rakower’s June 28 preliminary injunction.

But Rakower then ultimately sided with the city, which argued that it has the right to institute and modify traffic regulations on city-owned streets.

Schwartz filed his appeal three days later seeking a stay. He won the stay, then the appeals court lifted it.

Schwartz told The Post that his original suit still stands and that he will fight his case even if the city institutes the ban before he gets another day in court. He said a judge likely won’t hear his suit until January.

“My neighbors in Chelsea and the [West] Village are going to be bracing themselves for an onslaught of cars coming down the streets during the day,” Schwartz said of the expected rerouted traffic. “Everybody is going to be very upset about it.”

But transit officials and advocates say the M14 bus, which carries 27,000 daily riders along 14th Street despite being the city’s worst-performing route, desperately needs a dedicated path for its buses. The MTA anticipates that the car ban will cut 2 to 9 minutes off the bus riders’ commute time.

“New Yorkers who ride the M14 are about to see their bus line transformed from one of the city’s slowest into one of the fastest practically overnight,” said Tom DeVito of Transportation Alternatives, which cooked up the busway concept three years ago in response to the since-canceled L train shutdown.

“This should bring an end to the legal shenanigans that have been holding up these improvements for months on end,” he said.

Once instituted, the car ban — which is being billed as an 18-month pilot — will be in effect seven days a week between Third and Eighth avenues from 6 a.m. to 10 p.m. Bus-lane paint and signage for the project has been in place since earlier this summer.

The city DOT did not immediately respond to a request for comment on when the new traffic restrictions will go into effect.

Friday’s ruling marked the second loss of the week for Schwartz, after a Queens judge ruled Monday against his bid to stop bus lanes on Fresh Pond Road.

Additional reporting by Priscilla DeGregory