The move comes after a years-long battle between the biz and European data protection agencies, which argued that changes to WhatsApp's small print hadn't been properly communicated and didn't comply with EU law.
The ICO said its investigation has found that had the firm shared user data, it would have been illegal.
At the heart of the issue is consent. Following that, the company will share data in compliance with the new rules.
Similarly, they felt that WhatsApp's use of pre-ticked boxes was not "unambiguous" and that the information provided to users was "insufficiently specific".
The investigation - which looked only at situations where WhatsApp wanted to share information with Facebook for business interests, not service support - confirmed concerns that the policy wasn't up to scratch.
"WhatsApp has not identified a lawful basis of processing for any such sharing of personal data", information commissioner Elizabeth Denham said, adding that "if they had shared the data, they would have been in contravention of the first and second data protection principles of the Data Protection Act".
The watchdog doesn't believe if there is any reason why WhatsApp would need to share user data with Facebook as the messaging service failed to provide lawful basis for this requirement.
WhatsApp has maintained that it hasn't shared any personal data with Facebook in the European Union, but in a letter to the biz's general counsel Anne Hoge, Denham indicated that this had not been made clear at the outset.
As Denham points out, there are two other takeaways from this case.
As WhatsApp has agreed not to share data with Facebook, for now at least, the firm has not incurred a financial penalty.
The French data protection authority (CNIL) is in the process of bringing enforcement action against WhatsApp.
In a statement sent to The Register, WhatsApp emphasised the pause it had put on data sharing.
The Information Commissioners Office (ICO) has completed its two years investigation in the data-sharing practices of WhatsApp. It's not a permanent commitment, and there are a few noteworthy exceptions, but it's good news for WhatsApp users who give a damn about their privacy.