PHILADELPHIA — Looking to strike a chord of harmony with street musicians, transit authority officials say they’ll no longer arrest people who perform in the city’s subway system.

The policy change is in response to two lawsuits the city settled — at a cost of $33,000 — with a saxophone player who was twice arrested for playing on SEPTA grounds.

“We’re going to revamp the policy,” Southeastern Pennsylvania Transportation Authority spokesman Richard Maloney said, referring to transit police arrest standards.

Four months ago SEPTA had to pay jazz saxophonist Byard Lancaster $15,000 in damages for arresting him in 2001 for playing in a subway concourse.

Yesterday SEPTA agreed to pay Lancaster, 60, another $18,000 for arresting him a second time in July.

In addition, SEPTA agreed to train its police in the new policy about dealing with musicians on transit property.

The settlement says SEPTA police may not arrest any street musician unless there is probable cause to show the musician is obstructing a highway, being disorderly or violating a noise ordinance or other criminal statute.

“Under no circumstances shall a street musician be arrested or told to leave a location merely because that individual is playing a musical instrument or singing,” the agreement reads.

Lancaster was first arrested for disorderly conduct by city police in November 2000 while playing the flute on a city street. The public outcry was so great that police dropped the charges and issued a citywide police directive not to act against street musicians.

SEPTA, however, has taken a tough stance against musicians on transit property. Lancaster successfully sued after SEPTA officers first arrested him in 2001 for obstructing a public way.

But on July 26 — just weeks after the 2001 case was settled — SEPTA police arrested him for “producing noise” as he practiced on a transit concourse. The charge was dismissed, but Lancaster pursued civil action.

Lancaster, whom City Council has declared a “cultural treasure,” could not be reached for comment.

His attorney, Paul Messing, said his client was “gratified that all the parties recognize that First Amendment rights apply to everybody and recognize the cultural importance of street musicians.”

Lancaster has said he loves to practice in the city’s subway concourses for the acoustics and the chance to earn extra money.