The court by its 2011 order had set up a panel of senior lawyers and eminent people to "assist and advise" the court to give suitable direction for the rehabilitation of sex workers.
The centre had contended that the said order gave the impression as if prostitution had the sanction of the top court.
The apex court bench of Justice Altamas Kabir and Justice Gyan Sudha Misra while modifying the 2011 order said that no encouragement was being given to prostitution.
The panel was asked to go into three aspects including - prevention of trafficking, rehabilitation of sex workers who wish to leave sex trade and conditions conducive for sex workers who wish to continue working as sex workers with dignity.
The panel was asked to study the three aspects and give suggestions to the court.
It was on the third aspect of the order that the central government sought a modification as there was scope of misreading it.
The order that was modified Thursday read that the penal would examine the "conditions conducive for sex workers to work with dignity in accordance with provisions of the Article 21 of the constitution".
The court while modifying the earlier order observed: "The above modification shall not be construed that by this order any encouragement is being given to prostitution."
Justice Misra added that the court's endeavour was to discourage the sex trade and the rehabilitation of those who wanted to quit it through suitable vocational training.