The prospect of large cutbacks in staff and rapid restructuring at Transport for London have receded after Tim Parker announced he would not be taking up his post as chairman and resigned as first deputy mayor. TfL will now continue to be chaired by mayor Boris Johnson, a post he had been due to hand over to Parker in September. Parker will remain as an advisor to Johnson and a TfL board member. The mayor's office said he would continue to work with Johnson on the "reform" and improvement of London's transport.

Sources with strong Conservative Party connections told Transit that it would now be more difficult for swinging changes to be made at TfL or for any decisions on restructuring the organisation to be taken rapidly. One said there had been indications that Parker would want job cuts of up to 30% at TfL, which has 20,000 staff.

"I think the reality is that it is far more difficult to make these decisions in a political context than in the business context Parker was used to," Transit was told. "TfL will still come under close examination, but there will not be the same urgency to do something that Parker would have brought."

Parker's reputation as a cost cutter who believed in making changes rapidly while leading businesses, including the AA and Clarks Shoes has netted him a £75m fortune and the moniker "The Prince of Darkness". Initially during his time as an unpaid full-time advisor to Johnson, he had turned his attention to the Greater London Authority. He was leading an ongoing review of that organisation, during which he is said to have fallen out with senior members of Johnson's team, when he resigned as first deputy mayor.

However, in announcing Parker's reduced role, Johnson referred only to TfL. "Transport for London is responsible for a huge range of transport policies that impinge directly on the lives of Londoners," Johnson said. "Over the last few weeks, however, it has become increasingly apparent to both of us that the nature of the decisions that need to be taken are highly political and there is no substitute for me, as the directly elected mayor, being in charge. There are limits, therefore, to what can be delegated."

For his part, Parker said he had concluded that "it would not be appropriate for an unelected official to chair a body which is responsible for most of the money and a large part of the brief of an elected mayor". He added that his position as an advisor did "not justify my full time and exclusive commitment to the Greater London Authority, or the title of first deputy mayor" - a comment which Conservative sources described as "bizarre" and an indication that Parker had found difficulties transferring his robust style to the public sector.

Parker's diminished role also appears to have reduced the possibility of transport commissioner Peter Hendy being replaced, according to seasoned political observers. "The real winner out of this is Hendy who is probably indispensable now," Transit was told.