Mr. Netanyahu appeared to have been taken by surprise by the news that the project had gotten underway, though officials in his office declined to confirm that.

The bus plan was conceived by the Israeli Defense Ministry, apparently in response to pressure from Jewish settlers in the occupied West Bank who have long demanded separate transportation for the Palestinians.

The plan called for Palestinians who work in Israel to return to the West Bank at the end of the day through one of four designated Israeli checkpoints, and then to take Palestinian buses to their towns and villages. They would no longer have been allowed to take Israeli buses traveling directly from Israeli cities to West Bank settlements, which cuts down on travel time for Palestinians who live along the way.

The defense minister, Moshe Yaalon, denied that there had ever been a plan to segregate the buses.

“There was no discussion to do so, no decision was taken to do so, and there will be no decision to do so,” he said in a statement later on Wednesday.

Mr. Yaalon said that the idea had solely been to tighten security by supervising the re-entry of Palestinian workers into the West Bank, by having them pass through the designated checkpoints.

Israel’s deputy defense minister, Eli Ben-Dahan, a member of the right-wing, pro-settlement Jewish Home party, said he was surprised by the reversal, having learned of it as he was defending the project in Parliament.

“There is no apartheid here,” he said, telling opponents to “stop blackening Israel’s reputation.” He defended the travel rules on security grounds, citing Palestinian attacks on Israelis.