Passengers on a Victoria-bound National Express coach claimed a Muslim man was kicked off "because he looked shifty".
The man was on a Thursday bus to London from Bristol when a group of woman allegedly started staring at him, before complaining to the driver who then removed him from the coach.
University of Bristol student Rebekah Makinde was one of the passengers who complained after the man was escorted off the bus in what she felt was an Islamaphobic incident.
The 21-year-old said: "As soon as the man sat down, one of the women went to speak to the driver. Another member of staff then came on and asked the man to get off.
"He didn't protest or anything, he just got off. What disgusted me the most was that someone actually thanked the woman after he left."
When Ms Makinde asked the driver why he had to leave, she said she was told it was because he wouldn't put his luggage in the storage hold.
She added: "It's ridiculous. Everyone had luggage with them on the coach, I had bags and my laptop on my seat next to me and nobody said anything about that.
"The coach wasn't even that busy and there were plenty of free seats.
"It was only when the woman raised her concerns about the man saying she felt uncomfortable that he was asked to leave.
"I heard the entire exchange between the woman and the driver and I know luggage was not the reason he was asked to leave.
"I understand that drivers want their passengers to feel comfortable, but not if it stems from someone's unfounded and Islamophobic beliefs and at the expense of another paying passenger.
"I am truly appalled."
The number of Islamaphobic hate crimes was found to have rocketed by 50% in London in June.
Nick McDonald from Bristol, was also on the coach on the way to a work conference in London and overheard the exchange.
He said: "I heard the group of women at the front of the coach say he looked 'shifty'.
A National Express spokesperson said: "We categorically deny an incident in which a passenger was asked to leave one of our coaches was in any way Islamophobic.
"The gentleman concerned boarded with excess luggage which became an issue for a number of our other customers.
"He refused to put the excess luggage in the hold when requested, was abusive towards our staff and walked out of the station.
"Our staff, who often have to make difficult decisions at short notice, remained professional throughout and are extremely upset at these serious allegations which are both unfounded and untrue."