A proposed law banning the "glorifying" of terrorist acts has been revised, following criticism of the proposals.
Charles Clarke said there had been difficulties with the wording
People would have to "intend to incite" further acts of terror to be convicted, Home Secretary Charles Clarke has said.
Opponents had said the original proposal was unclear and could threaten civil liberties. Mr Clarke denied plans were being "watered down".
The plan to detain terror suspects for up to three months without charge would stay, the home secretary said.
Mr Clarke also published new plans to give police powers to temporarily close down places of worship being used by extremists.
Failure of the trustee or registered owner of the place of worship to take steps to stop such behaviour would be a criminal offence.
On the "glorifying" offence, Mr Clarke said: "We believe that glorification of terrorism is wrong and should be outlawed in law - we have made that clear all the way through.
"But a number of people have made observations to the effect that there were difficulties in the wording we originally suggested, and so we thought bringing together the glorification and incitement clauses in the bill would be the best way to deal with that."
He said it was not a case of "watering down" the new Terrorism Bill.
It would, he said, make it an offence to "make a statement glorifying terrorism if the person making it believes, or has reasonable grounds for believing, that it is likely to be understood by its audience as an inducement to terrorism".
Kevin Martin, the head of the Law Society, which represents solicitors, said the government had been right to amend the "poorly drafted legislation which would have put free speech at risk".
But John Cooper, a criminal barrister, said the legislation remained "totally and utterly unworkable".
"The courts are going to have a great deal of difficulty in establishing what intent is," he said.
Dominic Grieve, the Conservative shadow attorney general, said: "It's a climb-down - common sense has finally prevailed."
He said it had been "immediately apparent" when the plans were published three weeks ago that the one relating to glorification of terrorism was "completely unworkable".
Liberal Democrat home affairs spokesman Mark Oaten said: "The new definition is a major improvement.
"It means that cases where people are deliberately trying to provoke terrorism are more likely to stand up in court."
But he said the "case still has not been made" for the detention without charge of suspects beyond 14 days.
Mr Clarke said he remained convinced the maximum time limit for detention of terror suspects should be increased to three months.
He said that under existing laws, the police were using the maximum 14 day period only in exceptional circumstances - with the suspects charged in all cases.
"The police use their existing detention powers cautiously and in moderation, and I am confident that they would use an amended power in the same careful fashion," he said.
"There would also be proper judicial oversight of detention. Such powers already operate successfully in other European countries - in France and Spain suspects can be detained for up to four years before trial."
The Home Office issued a seven-page Metropolitan Police document defending the three-month detention plan - it contained details of three terror cases yet to come to court, including one described as the largest mounted in the UK.