The controversial blue clay used by the Madrid Masters was banned by the ATP on Saturday, a move which will head off a devastating boycott of the crucial French Open warm-up event by the world's leading players.
The surface, which was introduced for the first time at this year's tournament, was widely condemned by the world's top two, Novak Djokovic and Rafael Nadal who insisted they would not return to the event in 2013 if the blue clay remained.
"After careful consideration, I have decided that blue clay courts will not be allowed next year," said ATP executive chairman and president Brad Drewett.
"I very much believe in innovation and exploring ways to enhance our sport.
"While the blue clay may have offered better visibility on television, there were clearly issues with the quality of the courts in Madrid this year, which were not acceptable at an ATP World Tour Masters 1000 tournament, one of our top events worldwide.
"Regardless of colour, we must first ensure that courts are safe and fair for players."
The decision was a major slap in the face for tournament promoter Ion Tiriac whose introduction of blue clay had followed an earlier, more popular innovation where he had hired catwalk models to take on the role of ballgirls.
"I know that Ion Tiriac was also disappointed with the court quality in Madrid this year," added Drewett.
"Ion has been a great supporter of the game for many years and I continue to encourage his ideas, including the testing of blue clay at non-ATP World Tour events.
"At this time, however, it's clear that further development is required before it can be considered for use at the ATP World Tour level."
French Open champion Nadal lost his only claycourt match of the season in Madrid when he slumped to a third round defeat to compatriot Fernando Verdasco.
"Movement is very important for me and I couldn't move. I couldn't hit ball the way I wanted," said the world number two.
"The ATP and the tournament can do what they want...if things continue like this, it will be very sad. Next year this will be one less event for my calendar."
Djokovic, who was beaten in the quarter-finals by fellow Serb Janko Tipsarevic, backed Nadal in his refusal to return to the Spanish capital.
"If the ATP has protection for the players in mind, there is no way that Madrid is going to keep the blue clay. There is no discussion in my mind - no blue clay for me," said the world number one.
The tournament was won by world number three Roger Federer.