A bus service that required male and female passengers to sit separately for religious reasons will no longer operate under that arrangement.
It emerged last week that women who took the B110 bus through a part of Brooklyn that is home to high numbers of Chasidic Jews were being told to sit at the back of the vehicle.
Melissa Franchy, a Columbia Journalism School student, reported that she had been scolded and told to move from her seat by male passengers.
Although operated by a private group, the bus route is still part of New York's public transport network and is used by non-Jewish residents.
Ms Franchy's experiences of the "segregation" policy were reported by the New York World publication. The report prompted outrage from New York Mayor Michael Bloomberg and the Anti-Defamation League, who called the policy discriminatory.
The New York City Department of Transportation wrote to the bus operators, the Private Transportation Corporation, warning that the policy was a direct violation of the franchise agreement and could lead to the agreement being cancelled.
In a letter to the transport department, the Private Transportation Corporation denied allowing a policy of gender-segregation.
They said they did not "support, promote or condone any conduct involving the segregation of…passengers to various areas of the bus based upon gender" and added that they would take steps to stop drivers from allowing it.