BTP said it had "unintentionally caused concern" by suggesting a new operating model, which meant all officers would investigate sexual offences.
It said it would now carry out an "urgent review" of its plans.
The number of sex crimes reported on London transport rose by over a third last year.
The Sexual Offence Unit was originally set up to tackle crimes on the London transport network.
In response to the news, the group End Violence Against Women (EVAW), said: "Good on British Transport Police for listening and having a re-think".
EVAW had previously said losing the unit would "dilute the expertise" required to tackle sex crime.
Figures released recently showed that between April and December 2015, police received 1,603 reports, compared with 1,117 complaints in the same period the year before.
An internal risk assessment by Transport for London (TfL) has also suggested that the introduction of the Night Tube will lead to a rise in sexual offences on the Underground.
In Japan, Russia, Brazil, India and Germany, seats and carriages are reserved for women on public transport to protect them from sexual harassment.
Last August, Labour leader Jeremy Corbyn sparked debate when he said he would consider introducing segregated carriages in Britain to stem the rise in assaults on public transport.

Mr Bondevik, who said he was travelling on his diplomatic passport, was held for about an hour.
He said his passport also indicates he is a former prime minister.
Immigration officials told him it was unrelated to President Trump's temporary ban on Iranian nationals.
Instead, he was told it related to a 2015 law which places extra restrictions on countries that are part of the US visa waiver programme, according to an interview with ABC7 news.
But Mr Bondevik said he has never had an issue travelling to the US with the same document before Mr Trump's order.
During his 2014 Iran trip, he spoke against extremism at an international conference on behalf of human rights organisation The Oslo Centre, of which he is president.
Iran is one of the seven countries affected by the controversial executive order from the new president.
"I was surprised, and I was provoked," he said, suggesting that the mention of Iran had made him "stick out".
"There is no reason to be afraid of a former head of government who has been on official visits several times to this country, including in the White House," he told Norwegian broadcaster TV2.
The former prime minister was flying to the US to attend the national prayer breakfast event in Washington - which President Donald Trump also attended.
A specialist policing unit which investigates sexual offences on the Tube will not be disbanded  the British Transport Police (BTP) has confirmed.
[NEXT_CONCEPT]
The former prime minister of Norway, Kjell Magne Bondevik, said he was detained at a US airport earlier this week because he had visited Iran in 2014.