The no-frills alterative retains many the elements of the original design including waterfalls feeding two reflecting pools in the footprints of the World Trade Center's fallen twin towers.
The most radical change involves inscribing the names of the dead above rather than below ground, a change lobbied for by many victims' families.
The new plan, developed by construction executive Frank Sciame, carries an estimated cost of around US$700 million, more in line with New York’s original budget of US$500 million.
Mr Sciame's redesign, "allows us to retain the essential design of the memorial and memorial museum, while identifying significant cost savings," New York Mayor Michael Bloomberg said in a statement.
Mr Sciame said in a report released on Tuesday that relocating the names of the victims to ground level would provide greater accessibility and remove the need for visitors to pass through security checks guarding the lower-level memorial museum.
The option saves costs by eliminating several museum galleries and access ramps and consolidating several entrances.
Mr Sciame said the memorial could still meet its scheduled opening date of September 2009.
The initial design, "Reflecting Absence" by architect Michael Arad, was unveiled way back in January, 2004. It was chosen from 5,201 entries submitted to an international memorial competition.
Mr Arad has accepted what he described as the "painful cuts" made to his original plan, especially the loss of the underground memorial galleries.
Construction work on Mr Arad's design began in March this year but ran into trouble as fundraising was suspended in May amid concerns that the memorial was way over budget.