Ken Livingstone's four-week suspension from the mayor's office has been quashed by a High Court judge.
Ken Livingstone likened the journalist to a Nazi camp guard
He was suspended for his remarks to a Jewish journalist likening him to a Nazi concentration camp guard.
The exchange with Oliver Finegold happened as the mayor left an event in February last year.
The mayor was challenging a decision by the Adjudication Panel for England that his comments breached the Greater London Authority's code of conduct.
The Board of Deputies of British Jews has demanded an apology from the mayor, regardless of the outcome of the case.
"What he doesn't seem to accept is a number of constituents for whom he is actually mayor - that is Holocaust survivors and the Jewish community - were offended by what he said and that apology he seems to have problems in giving," Jon Benjamin, the chief executive of the organisation, said.
At the High Court, Mr Justice Collins said the suspension would be overturned, regardless of whether or not the mayor won his appeal against the Adjudication Panel for England's finding.
The judge said: "I have made it clear the suspension will be quashed whatever I decide on whether the Panel's finding was correct."
He reserved his final judgment on Mr Livingstone's appeal to a later date, saying: "It is not an easy case. There are certain ramifications, whatever I decide, which will affect other matters."
The public were "heartily sick of the whole saga", Mr Benjamin said.
"I think we probably know what the chances of the mayor apologising now are, so we're not holding our breath," he said.
During the two-day hearing, Mr Livingstone's lawyers argued the panel's decision, made in February, was legally flawed on a number of grounds.
This included the fact the Mayor had not been acting in his official capacity at the time of the incident.
The panel's ruling was defended by the Ethical Standards Officer, who referred the case to the disciplinary body.
The ESO contended the Mayor's arguments were over-complicated and "trivialised" the code of conduct and there was no basis for the judge substituting his own judgment for that of the panel.
John Biggs, Labour's London Assembly member for City and London, welcomed the judge's decision to quash the order saying: "It should be for Londoners to decide if the Mayor should be removed from office and not an unelected quango. I am pleased that the judge agrees with us."
If the appeal fails, Mr Livingstone will be responsible for paying his own legal costs, estimated at £80,000, although he will continue to be paid.