Israeli Prime Minister Benjamin Netanyahu on Wednesday ordered the suspension of a controversial ban on Palestinians riding the same buses as Jewish settlers when returning from Israel to the West Bank.
The announcement came hours after the three-month pilot project approved by defence minister Moshe Yaalon began.
The ban was immediately attacked by rights groups and the opposition, who denounced it as an "unprecedented" move that heaped unnecessary humiliation on the Palestinians and would ultimately damage Israel.
Adding to tensions, a Palestinian driver rammed his car into two border policemen in annexed east Jerusalem, moderately injuring them, before he was shot dead by another officer, the Israeli authorities said.
A defence ministry official told AFP earlier that the bus ban would require Palestinians who work in Israel to return home by the same crossing without taking buses used by Israeli residents of the occupied West Bank.
Tens of thousands of Palestinians travel each day to work in Israel, mainly in the construction business, using travel permits each time they cross.
Such a ban, which has been demanded by settler groups for years on security grounds, would have significantly extended the Palestinians' commute time.
But the move was quickly stopped by Netanyahu, an official in his bureau told AFP.
"The proposal is unacceptable to the prime minister. He spoke with the defence minister this morning and it was decided that the proposal will be frozen," he said.
Under the measure, Palestinian commuters' outward journey would remain unchanged but for their return trip they would have to board special Palestinian-only buses, which would drop them off at the same checkpoint where they crossed.
They would cross the checkpoint on foot, then make their own way home.
Before, they were able to catch any buses returning to the West Bank, serving both Palestinian commuters and settlers.
Netanyahu's order was welcomed by Israeli rights group Yesh Din.
"The fact that numerous political leaders, high-ranking legal advisors and officers even considered such a despicable practice of ethnic separation on public transportation is worrying and should cause every Israeli to feel shame," said Yesh Din's legal counsel Michael Sfard.
"Yesh Din will continue to stand guard and fight until this plan is rejected in full."
Official figures provided by COGAT, the defence ministry unit which manages civilian affairs in the West Bank, show there are 52,000 Palestinians from the West Bank with a permit to work in Israel.
And recently published World Bank figures indicate there are an additional 40,000 who work illegally inside Israel.
Public radio said Yaalon had agreed to the ban as it would allow for "better control over the Palestinians leaving Israel and a reduction in security threats."
Mordechai Yogev, an MP with the far-right Jewish Home party, which fights for settler rights and has a senior role in Netanyahu's coalition, told the radio he had campaigned for three years to ban Palestinians from Israeli buses.
"On their way back from work, the Palestinians used to fill up the buses so there was no place for Israelis," said Yogev, himself a settler who advocates an Israeli annexation of most of the West Bank.
"Israeli woman, particularly soldiers, were often victims of sexual harassment," he alleged.
"This is by no means apartheid. The situation was simply unacceptable," he said.
Army radio said the ban had been opposed by military officials, who said the fact that many Palestinians travelled on board those buses was likely to reduce the risk of them being targeted in an attack.