Photographers held a mass photo call in February in protest at the law
A senior Scotland Yard officer has said photographers should not be stopped and searched without "very good reason".
John Yates, an assistant commissioner, was responding to complaints that professional photographers and tourists taking pictures had been challenged.
Earlier this year hundreds of photographers staged a protest outside Scotland Yard.
Mr Yates said officers must use their powers under counter-terrorism laws wisely or risk losing public support.
The head of specialist operations has circulated a note to all borough commanders.
Mr Yates said counter-terrorism legislation had created "important yet intrusive powers.
'Very exceptional circumstances'
"They form a vital part of our overall tactics in deterring and detecting terrorist attacks.
"We must use these powers wisely. Public confidence in our ability to do so rightly depends upon your common sense.
"We risk losing public support when they are used in circumstances that most reasonable people would consider inappropriate."
Mr Yates said there was no restriction on people taking photographs of public buildings or frontline police staff other than in "very exceptional circumstances".
Under counter-terrorism legislation, a police officer can stop and search someone if he or she has a reasonable suspicion they are a terrorist.
Digital images can be viewed and any item which the officer reasonably suspects may constitute evidence can be seized.
An officer can stop and search someone without reasonable grounds if they are in a designated area.
Officers do not have the power to delete digital images, destroy film or to prevent photography in a public place.
Shami Chakrabarti, director of Liberty, said the law had "always been an accident waiting repeatedly to happen".
She said: "It's time that Parliament stepped up to its duty to revise this dangerous power that is tempered neither by reasonable suspicion nor by adequate precision as to proper use.
"It is one thing to search everyone entering Parliament Square on the day of the Queen's Speech but quite another to hassle every photographer, protester or young black man in London with a power that's too broad to make sense."
The National Union of Journalists (NUJ) had said the law could be used to harass photographers working legitimately.
The NUJ has been urging the government to issue guidance to police forces on how exactly the law should be used by individual officers.
Photographers, both professional and amateur, held a mass photo-call outside the Met Police headquarters at Scotland Yard in February.
Peter Smyth, chairman of the Metropolitan Police Federation, had backed a call by Grimsby MP Austin Mitchell to introduce a formal code to clarify the position of both the police and photographers.
The Home Office has said that taking pictures of police officers would only be deemed an offence in "very exceptional circumstances". It said the legislation was designed to protect counter-terrorism officers.