Councillors have agreed to restore a 30mph speed limit to the B9130 at Markinch, near Glenrothes, between Bowen Place and the junction connecting to Balbirnie Estate following "poor compliance" with the lower restriction.
It will cost £10,000 to replace the signage on the roughly 400 metre stretch of road after surveys found that 85% of all traffic was travelling at around 30mph.
Ken Gourlay, Fife Council s head of transportation, said motorists had ascertained for themselves that 20mph was not the appropriate speed for the road.
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"The persistent lack of compliance with the speed limit and the results of the speed surveys clearly indicate that drivers perceive 30mph to be the appropriate limit on this stretch of road," he said in a report to the Glenrothes area committee, presented on Wednesday.
"The replacement of the 20mph zone with a 30mph limit would align the mandatory limit to driver’s perception, as advised by national guidance on setting speed limits."
However, councillors have warned against allowing motorists to essentially dictate what they see as the correct speed limit to the council.
Cllr Altany Craik, the council's transportation convener, said: "Basically, if you read further into the report, we're saying we should make it 30mph because drivers can't drive at 20mph. That's what we're saying.
"Drivers have determined the speed of this road regardless of the amount of speed cushions put in, or any enforcement, the drivers themselves have decided it should be a 30mph [zone].
"I'm not sure I agree that is the best way to determine what the speed limit should be. That said, this bit of road is an area of difficulty for us.
"What we need to be aware of is the impact of having this kind of justification for a change. It means all over Fife we're going to be encouraging people to say, 'actually we don't like that 20 or that 30 or 40'.
"I think we need to be careful about justifications. It should be about safety and making sure the right facilities are there for the right traffic management."
The £10,000 bill relates to additional measures that will be introduced to ensure the speed limit is complied with. Transport officer Dhusjan Sivaratnam said this could include pedestrian islands, speed bumps and "dragon's teeth" markings that encourage motorists to monitor their velocity.
Glenrothes North, Leslie and Markinch councillor John Beare moved that such measures should not be installed without at least running them past ward councillors or the Glenrothes area committee first.
"The issue of the extent of the 20mph zone was raised and then it turned out drivers weren't recognising it anyway," Beare said.
"I've certainly been in the car doing 20mph down that way and been overtaken at speed by other vehicles.
"There are other speed and traffic calming measures that can be put in place that aren't just the simple solution of speed cushions."
SNP councillor Fiona Grant, convener of the committee, accepted Cllr Beare's suggestion.
"We're just continuing to discuss the finer detail," she added.