The much-maligned bus gate in Portswood will not return after the scheme was suspended in May.
The future of the highly-controversial scheme, which started as part of a trial in January, was left open when it was stopped following a three-month review.
But a spokesperson for the council has now said that the project "will not be moving ahead" after residents raised concerns regarding road safety and congestion.
Funding allocated to the scheme will be made available for other projects along the Eastleigh to Southampton corridor.
READ MORE: Portswood road bus gate suspended: Businesses celebrate
The council has said that independent monitoring of the traffic impacts from the trial bus gate showed reduced vehicle traffic and increased pedestrian activity on the high street, but that a "significant rise in traffic along residential streets" was also identified.
It was acknowledged that this led to concerns being raised around road safety and congestion from local residents, with the local authority saying that this is "ultimately" why the trial will "not be continuing in its current form".
A spokesperson for Southampton City Council said: "Through our Local Transport Plan we will continue to take steps to make Southampton a greener, healthier and more equal city by increasing the travel options available to local people and reducing congestion.
"We remain committed to enhancing our bus network and working with our partners to deliver bus priority measures as well as providing new services such as the Southampton Weekend Park & Ride, increased frequency on services, and the introduction of additional night bus services across the city."
READ MORE: Portswood Road bus gate scrapped as residents celebrate
Funding will now be available to "deliver other improvements" along the Eastleigh to Southampton corridor, but these projects will "need to provide sustainable transport enhancements in line with the Transforming Cities Fund objectives".
The council has said that it will be seeking feedback from businesses and local people in regards to these future projects.
Councillor Christie Lambert took over as cabinet member for transport from Councillor Eamonn Keogh in July, two months after the Portswood scheme was suspended.
Cllr Lambert said: "I’d like to thank local people, businesses and community groups as well as the project steering group, for their time and consideration in taking part in the various consultations and co-design workshops and their commitment to improving Portswood."
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