The broadcaster has also previously revealed that the decision was taken by a team of people which included senior editorial figures.
On Thursday, the BBC said it had received 18,656 complaints over the incident.
Channel 4 News presenter Krishnan Guru-Murthy praised Lord Hall for the move, adding: “But once again it has taken a direct intervention by the DG to overturn a mistake on race previously defended by the BBC’s editorial policy managers.”
Larry Madowo, a US correspondent for the BBC’s World Service, also commented on the move, saying that despite being black he had previously not been allowed to use the racist term in an article when quoting an African American.
“But a white person was allowed to say it on TV because it was ‘editorially justified’,” he said.
This is not the first time Lord Hall has made an intervention following a backlash over the BBC’s handling of discussions around race in its news output.
In September, he reversed a ruling by the corporation’s Executive Complaints Unit after it said BBC Breakfast host Naga Munchetty breached editorial guidelines when she condemned comments made by Donald Trump after he told female Democrats to “go back” to their own countries.