That requirement comes from the previous section (http://www.legislation.gov.uk/id/ukpga/1991/22/section/65), which requires that (inter alia) "such traffic signs are placed and maintained, and where necessary operated, as are reasonably required for the guidance or direction of persons using the street". There are also requirements to follow the instructions of the traffic authority and any guidance (http://www.dft.gov.uk/publications/street-works-safety/) issued by the government.

In this case, I think the reasonableness requirement is enough -- it's reasonable to let the owners of abnormally-wide (say >1.5m wide) cycles fend for themselves, but if the lane is non-obviously narrow then the undertaker ought to place signs to indicate this.