The move comes nearly two months after Supreme Court stayed the circular issued by the Kejriwal-led government.
On May 6, government had issued a circular asking all its officials to lodge a complaint with the Principal Secretary (Home) if they come across any news item which damage the reputation of the Chief Minister or the government, so that further action can be taken.
"Government has withdrawn its May 6 circular this week. This circular was related to filing defamation cases against media organisations for any news that causes damage to its reputation or that of CM and other ministers," said a senior government official.
Demanding withdrawal of circular, the Editors Guild of India had also deplored the controversial circular issued by Delhi government regarding defamatory news, calling it a "crude attempt" to "still" media criticism.
Observing that 'prima facie' the Delhi Government circular, asking officials to lodge complaints regarding defamatory reports, tends to "jeopardise" the freedom of press, the Press Council of India (PCI) had in May sought to know the reasons that necessitated such a move.
On May 14, Supreme Court had stayed the May 6 circular by Delhi government.