The Turner Prize has ditched sponsor Stagecoach South East following an outcry over chairman Sir Brian Souter's historic support for attempts to repeal anti-gay legislation.
The firm was to due to support an exhibition of the four shortlisted artists at the Turner Contemporary gallery in Margate.
But there was criticism over the company's involvement as Sir Brian had backed a ban on teaching LGBT issues.
In 2000, the businessman gave £1m to a campaign to keep the Section 28 law in Scotland - the failed Keep the Clause campaign.
READ MORE: Arts controversy: Turner Prize questioned over choosing Stagecoach as its main sponsor
The local bus company said the decision had been "mutually agreed" and while it was committed to diversity did not want anything to distract from the artists.
2018 Turner Prize winner Charlotte Prodger accepts the award during a ceremony at Tate Britain in London
Gay rights campaigner Peter Tatchell was among those against the prize's partnership with Stagecoach South East.
He told the Daily Telegraph he was "surprised and disappointed" when he heard the announcement.
In a statement, Turner Contemporary and the Tate gallery - which organises the annual prize - said its priority was to "show and celebrate" artists and their work.
READ MORE: Scotland's Venice art work tour across country
It said: "The Turner Prize celebrates the creative freedoms of the visual arts community and our wider society.
"By mutual agreement, we will not proceed with Stagecoach South East's sponsorship of this year's prize."
Stagecoach South East said: "We are absolutely committed to diversity in our company, however we do not want anything to distract from celebrating the Turner Prize artists and their work."
Last year's Turner Prize was won by Scottish artist Charlotte Prodger with her film, shot on an iPhone, about "queer identity" and her experience of coming out as gay in rural Scotland.
During the press conference to unveil this year's shortlist when questions were if anyone had considered the choice of sponsorship a bad idea, "there was an awkward silence", according to reports.
READ MORE: Turner Prize short listed artist Charlotte Prodger to represent Scotland in Venice
Tate Britain director Alex Farquharson said that picking a sponsor "is very much a matter for the hosting venue"
The winner of the £40,000 prize will be announced on 3 December.
Nominee Helen Cammock
This year's Turner Prize nominees are Lawrence Abu Hamdan, Helen Cammock, Oscar Murillo and Tai Shani.
The shortlist of artists was announced on Wednesday and their work tackles issues including oppression and marginalised communities.
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