The measure was introduced on August 24 after record-breaking scorching weather with highs of 40C.
But on Tuesday, Thames Water said it was lifting the measure with immediate effect, saying recent heavy rains meant water levels have started to improve.
Both September and October experienced long term average rainfall above 130%, it said.
The first two weeks of November also saw a months' worth of rainfall as heavy rains battered the capital.
“Careful consideration has gone into our decision to remove the ban,” said Thames Water CEO, Sarah Bentley.
“Despite the recent rain, we still need to protect our future water supply.
“We need more rain throughout winter to ensure our rivers and reservoirs are fully recharged, ready for spring and summer next year.”
However, Ms Bentley said some water storage sites in west London remain below average levels, requiring a “cautious approach” and monitoring of water levels throughout autumn and winter.
The ban had affected 15 million customers in London and the Thames Valley, preventing them from watering gardens or washing cars.
The utility company had faced criticism at the time for imposing the measure when around a quarter of its supply was lost in leaks.
Ms Bentley said fixing leaks was the company’s “top priority” and that engineers repaired 1,000 leaks a week.