A controversial group whose inclusion in last year's Pride parade put its future funding into doubt says it will not participate in this year's event.

Queers Against Israeli Apartheid announced on Friday that it would not seek to participate in this summer's march. Instead they will host separate community events during Pride Week.

Members of Mayor Rob Ford's administration said the group promotes hate and threatened to pull more than $120,000 in city funding for the parade over the group's inclusion.

QuAIA spokeswoman Elle Flanders claimed the group was being used as a pretext to kill funding for the Pride parade, one of the largest in the world.

"Rob Ford wants to use us as an excuse to cut Pride funding, even though he has always opposed funding the parade, long before we showed up," Flanders said in a statement. "By holding our Pride events outside of the parade, we are forcing him to make a choice: fund Pride or have your real homophobic, right-wing agenda exposed."

The group was thrust into the spotlight during last year's parade when organizers banned, and then reversed the decision, to allow the group to march.

City council decided to withhold future grants to parade organizers unless it ensured all participates complied with the city's anti-discrimination policies.

Earlier this week, city staff released a report saying the city's city's anti-discrimination policy was not broken by allowing a group opposing "Israeli apartheid" to march in the parade.

QuAIA said the group was "vindicated" by the ruling, but would not push the issue any further.

The Canadian Jewish Congress said the QuAIA's decision not to march in this year's Pride Parade was a positive step.

"There is absolutely no place in the Pride parade for hateful and discriminatory messages. The Pride Parade should be about openness and inclusivity and not about divisive, inflammatory messaging, which serves only to create a hostile and toxic environment," said CEO Bernie Farber.

Toronto Coun. James Pasternak expressed relief at QuAIA's announcement but said further assurances were needed.

"This is good news for the people of Toronto and members of City Council. However, we have heard this song before from QuAIA. So we must have guarantees that they will not participate," Pasternak stated.

"Our mission at City Hall is to bring people together and not drive them apart. QuAIA does not meet this threshold."