Mayor Bill de Blasio suffered a huge embarrassment Thursday when the City Council abruptly shelved one of his high-profile initiatives: his bill to limit the horse carriage industry. As our Michael Scotto reports, de Blasio insists he's not giving up.

Outside Central Park, horse carriage drivers were doing a victory lap while de Blasio nursed the wounds of a major political blow.

"I feel great. I think that it's the right decision," said Joshua Sausville, a horse carriage operator. "I feel like my union didn't let me down."

Thursday, the City Council withdrew legislation that would have reduced the number of carriage-horses by nearly half and confined them to Central Park.

The council acted after the Teamsters abruptly pulled their support, a day before the council was to vote on the plan, which de Blasio negotiated with the union just last month.

"We had a good faith agreement with them that was worked on for many weeks, and they didn't keep to their agreement," the mayor said.

The deal unraveled in recent days as powerful interests lined up against it.

Community leaders and parks advocates complained about plans to spend as much as $25 million of taxpayer money to build a stable for the horses in the park.

The drivers said they'd be put out of business before that stable could be constructed.

In addition, the Transport Workers Union joined pedicab drivers to block a part of the agreement that would have banished pedicabs to the northern part of the park.

"We are very happy," Ibrahim Barrie, a pedicab driver, said.

Despite the defeat, de Blasio insists he's not giving up on this issue and that he's going to continue fighting until it is resolved. 

During his mayoral campaign, de Blasio vowed to kill the industry on his first day in office.

But now that he's tried and failed, some lawmakers said the issue should be put to rest.

"I hope that the mayor will turn the page and move on," said City Councilmember Jimmy Van Bramer of Queen.

But that could be difficult.

NYCLASS, the animal rights group that went all out for candidate de Blasio because of his opposition to the horse carriages, called the council's decision "outrageous and wrong."

Outside Central Park, the debate showed no sign of ending.