The photo sharing service has announced it will now keep the same advertising section in its terms of service it had in 2010.
The announcement comes in response to the backlash the company has received when it made changes which would allow it sell user photos to advertisers.
"Because of the feedback we have heard from you, we are reverting this advertising section to the original version that has been in effect since we launched the service in October 2010," Instagram's CEO, Kevin Systrom, wrote in a statement.
"Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work."
Systrom had released a statement earlier this week telling users that "it is not our intent to sell your photos."
The photo-sharing service saw many of its users delete their accounts after it announced it would have rights to sell their photos.
Instagram also wrote that by using its service, users agree that business or organisation can pay the company to use their name, photos and data without any compensation to the user.
The controversial outcry, then caused the company to quickly respond and assure users that their photos would not be sold after all.
"Instagram's response to user comment has been swift and meaningful - they make it clear that users will keep owning their photos and they will not be sold to advertisers," Vanessa Barnett, technology and media lawyer at Charles Russell LLP told CBR. "The most interesting point about this clarification is this: if users had not reacted so badly, would the language have been changed, because it was presumably pored over by business and lawyers before being released?
Media analysts say that even though Instagram is a part of Facebook, it needs to be more careful about making changes we compared to its parent company.
"There's been a sort of backtrack in terms of Instagram's privacy changes. I think instagram felt there was an overreaction to put what they put forward," Adam Leach, principal analyst at Ovum told CBR.
"There were users that had even decided to quit the service, Even though Instagram tried to clarify their intent, I think what it shows is that they have to be more careful about how they change terms and conditions when introducing new policies that deal with people's private data.
"Instagram has got to think more carefully about how its community of users will react especially if they can easily move to a different, similar service. However, users should understand if you're using a free service there is an expectation that the company wants to monetise. Free services like Facebook or instagram are going to try and make money out of using their service."