By Jonathan Davies

New York City has backed down in a bid to limit the number of cars operated by taxi app Uber in the city.

Instead, Uber has agreed to take part in a four-month study to assess the impact its cars have on traffic and pollution.

The city had initially sought a 1% cap on growth and a year long study into its impact. The cap was intended to support New York's famous yellow taxi industry, which has been hit by the rise in popularity of Uber.

New York's first deputy mayor Anthony Shorris said the deal was a "smart and fair way" to settle the issue.

He said: "Uber will share information for the study above and beyond what has previously been provided, with safeguards to protect privacy.

"Uber has also agreed to maintain its approximate current rate of growth and not flood the streets with new licenses and vehicles."

In a statement, Uber said: "We are pleased new drivers will continue to be free to join the for-hire industry and partner with Uber. Together, we can build an even better, more reliable transportation system."