Malaysia's home affairs minister has denied that his government has stopped issuing visas for Indians.
Malaysia is home to thousands of workers from India
Radzi Sheikh Ahmad said there was no new rule barring Indian recruitment, despite comments to the contrary by his own departmental officials on Tuesday.
But the BBC has learned that there has still been a policy change, although perhaps a smaller one than appeared to be the case at first.
More stringent checks now seem to be in place for Indians applying for visas.
According to the BBC correspondent in Kuala Lumpur, Robin Brant, what looked like a brazen diplomatic gesture on Tuesday now appears more of a subtle manoeuvre.
Claims that a full-scale ban on new visas was in place and that no new Indian workers would be able to come to Malaysia caused immediate uproar.
But on Wednesday, Home Minister Radzi Sheikh Ahmad told the Associated Press: "Let me state categorically that the home ministry never came out with any ruling that we have stopped the intake of foreign workers from India."
A Ministry of Home Affairs spokesman told the BBC that Malaysia would, though, be requiring further "detail" from Indian applicants in future.
He added that each person would be treated on a "case by case" basis.
According to our correspondent, the clampdown is almost certainly linked to protests by Malaysian Indians in recent months, which have taken ministers by surprise.
Demonstrators clashed with riot police during the protests, and the organisers were arrested and are now being held indefinitely under emergency powers.
India has so far made no official comment on the change in Malaysia's visa policy.
Malaysian Works Minister S Samy Vellu, one of the ministers involved in the confusion over the apparent ban on Tuesday, met Indian Prime Minister Manmohan Singh later on Wednesday in Delhi.