Mayor Vincent C. Gray used his weekly news conference two weeks ago to unveil a major advance for the city’s taxi riders: a meter system offering credit-card readers and satellite navigation in every cab.

Now, the system’s rollout has been indefinitely halted, caught up in a business dispute over how the $35 million contract with VeriFone Systems was awarded — meaning it could be months or more before riders can swipe credit cards in every taxi.

The decision to halt work on the contract, made recently by an administrative law judge on the city’s Contract Appeals Board, has frustrated some city officials eager to upgrade taxi service.

“I’m unhappy,” said Ron M. Linton, chairman of the District’s Taxicab Commission. “But I have to live with the legal structure that the government had developed. . . . I don’t think [the decision to halt work] is in the best interest of the people of the District of Columbia.”

Linton and other city officials argued that the system should continue being deployed while a pair of bid protests are resolved, citing January’s presidential inauguration and “the public safety and welfare” among the exigent circumstances to support their position.

But the contract appeals judge, Monica Parchment, said in her Aug. 31 order to stop work that their arguments were flimsy.

“The Board does not dispute that the modernization of the current taxicab system’s safety features is a tremendous accomplishment for the District’s leadership, residents and visitors,” she wrote. “However, the District has not presented the Board with substantial evidence that its interests will be impaired by waiting for our merits decision before commencing installation.”

That decision is expected next month, according to lawyers ­familiar with the case.

Linton said that if the VeriFone contract is upheld before ­mid-October, a “great majority of the cabs” could still be outfitted with the new meters in time for the inauguration. If the decision comes much later, “not very many cabs will be ready to go,” he said.

The two bidders protesting the VeriFone award — Creative Mobile Technologies of New York and Alexandria’s RideCharge — allege irregularities in the procurement process. The companies were named as finalists but were excluded from final consideration, leaving only VeriFone eligible for the contract.

George Lowe, a lobbyist for Creative Mobile, said he was pleased with the stop-work order, noting the large amount of money at stake. “Another couple of months to make sure we get it right is time well spent.”

The losing bidders are asking the appeals board to order a new solicitation. If they succeed, it could be next summer before cabs with uniform “smart meters” are common on D.C. streets.

About 30 of the VeriFone meters have been installed. About half of those are in taxis belonging to the District Cab fleet, which previously used an older VeriFone system. Owner Jeffrey Schaeffer said he’s been pleased with the new meters and will continue using them while the contract dispute is being settled.

“If it’s a small delay, for a month or two months, I don’t think it’s a big deal,” he said. “My fear would be that if they resolicit this thing, it would push it back to next summer.”

The delay, Schaeffer added, has contributed to an “air of apprehension in the industry” prompted by a taxi industry reform package passed by the D.C. Council in July.

Council member Mary M. Cheh (D-Ward 3), who introduced the legislation, called the delay “unfortunate” and said, “I just hope the final ruling comes swiftly.”

Linton said he is “still absolutely convinced” that the meter solicitation was proper. “I feel very confident that we’ll prevail,” he said. A spokesman for Gray, Pedro Ribeiro, called the delay a “relatively small bump in the road.”

There is one upside for cab riders still on that bumpy road: The assessment of a new 50-cent surcharge earmarked for taxi service improvements was delayed along with the new meters. But Linton said he’s exploring options for collecting the fee while the contract matter is resolved.