Transport for London says it has safeguarded the 812 PlusBus which runs between Hoxton and Angel after plans by Islington Council to cancel the service.
TfL has agreed to provide funding for the route, which is mainly used by elderly passengers, until 2013 after which the council must provide funding for at least a further two years.
The council had previously asked Mayor of London Boris Johnson to save the route.
Mayor Johnson said “It would have been wrong for the many elderly residents who rely on this service to suffer if the borough withdrew their funding for this service.”
TfL have stressed that it has not previously been called on to contribute to the scheme’s running costs and that earlier funding and plans to axe the route had all been decided locally.
The funding agreement allows TfL to reclaim the £200,000 funding in the borough fails to honour its commitment to fund a further two years of service.
The Mayor said officers “have made it clear to the borough that this is no short term fix and that they must ensure that the service can continue to run after the TfL funding has stopped.”