Directory enquiry service The Number has escaped a fine over allegations its staff deliberately cut callers off in an attempt to earn extra cash.
The Number has run a high-profile advertising campaign
Telecoms regulator Oftel said it was satisfied with the steps The Number had taken to improve its service - including the sacking of staff at the centre of the allegations.
But the regulator said it would be monitoring The Number's progress - and it promised further action to improve the quality of all the directory enquiry services that took over from BT 192 last month.
It also revealed it would be carrying out a "mystery shopper" exercise to check the accuracy of information given out to callers.
Press reports at the weekend alleged that The Number's employees routinely hung up on customers in an effort to earn bonuses by reducing average call times.
The Number had been warned it could face fines or even lose its licence to operate if it was found to have encouraged the practice.
But Oftel said it was satisfied that the company had moved quickly to stamp out any abuses, after grilling its bosses on Thursday.
The Independent Committee for the Supervision of Telephone Information Services (ICSTIS), which regulates premium rate lines, also attended the talks.
Oftel and ICSTIS warned The Number they would "use their regulatory powers" to take action against companies that fail to meet service standards.
But they also welcomed the company's commitment to "further improvements" in the quality of its service "and its offer to share with the regulators the independent monitoring it regularly undertakes".
"The regulators will also monitor implementation of The Number's system improvements that it described in the meeting to make sure that these measures work in practice," the statement added.
Oftel said "clear pricing and quality of service are critical to public trust and in the commercial interest of the (directory enquiry) firms themselves".
Cardiff-based The Number, which runs the 118118 directory service, said the press reports centred on a handful of employees who had been abusing a company bonus scheme.
"An incentive scheme was in place to help employees do a good job, but there were certain individuals who were taking advantage of it. This was not a matter of company policy, " a spokesperson said.
He added that some employees had been dismissed following an investigation.
The episode looks set to cast a further shadow over the liberalisation of the £300m directory enquiries market, designed to improve consumer choice and drive down the cost of finding telephone numbers.
With callers now free to choose between 20 rival directory enquiries firms, all with different telephone numbers, some have complained that the new system is confusing.
Critics have also claimed that since the new operators have different charging structures, it is difficult to tell whether the new services offer significant cost savings.