President Mahinda Rajapakse ordered his information ministry not to proceed with the proposed code of conduct bill, but instead leave it in the hands of senior editors to update their own code of ethics.
"The government will not go ahead with the code," a senior information ministry official told AFP on Sunday.
"The president met with editors on Friday and discussed the issue. They may or may not use elements of our draft," he added on condition of anonymity.
An editor who was at the meeting told AFP that Rajapakse made it clear that the government would not impose the proposed code on them.
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The Editors' Guild of Sri Lanka is to discuss the development and issue a formal reaction next week, the editor said on condition that his name was not used.
Sri Lankan editors as well as international rights groups had said that the proposed bill was too sweeping and would curtail freedoms already under threat in Sri Lanka which is emerging from decades of ethnic war.
The New York-based Huma