Vijay Anand, the chairman of India's Censor Board of Film Certification (CBFC), has resigned following his proposal to legalise the exhibition of X-rated films in selected cinemas across the country.
Mr Anand, a former filmmaker and uncle of director Shekhar Kapur, had attracted controversy for proposing to the Indian Government that changes should be made in the Indian Cinematograph Act of 1952.
The exhibition of such films would be neither desirable nor in order
These included legalising soft pornographic films, allowing them to be shown in certain cinemas under a new classification.
Although it is illegal to show pornographic films in India, almost every city has cinemas which do so.
Many screen films in the morning, re-inserting deleted scenes and bribing local police to turn a blind eye.
Mr Anand, who joined the Board in September 2001, has argued that legalising such films would solve the problem.
"Since we are unable to control it, we might as well try to regulate it," he told the government.
However, the ministry rejected his proposal, saying in a letter to him that "the exhibition of such films would neither be desirable nor in order,"
His proposals also met with opposition from women's groups, who have been demanding his resignation.
However, he is thought to have quit because he was unhappy with the government's decision, and felt as the board's chairman he should be free to make decisions.
If the content is meant only to titillate with no other redeeming feature, then one cannot permit it.
Shyam Benegal, Indian filmmaker
The government has now urged the censorship board to restrict its activities to providing responsible entertainment for Indian audiences, that reflects the values and morals of its audience.
Indian filmmakers reacted cautiously to Mr Anand's proposals.
"Films where the erotic element is justified as per the requirement of the script, must be permitted," said director Shyam Benegal.
"However, if the content is meant only to titillate with no other redeeming feature, then one cannot permit it," he added.
Indian censorship is among the strictest in the world, with sex, nudity, violence and politically sensitive subjects often being cut or edited out of films altogether.
A number of well-known Indian filmmakers have fallen foul of local censors.
Shekhar Kapur ran into trouble with his controversial film Bandit Queen, based on the life of Phoolan Devi.
And Mira Nair, whose most recent film Monsoon Wedding was a big box office hit in the UK, was ordered to make 40 cuts to her earlier effort Kama Sutra.
All films have to have a CBFC certificate before being shown at the cinema or on television.
A six-member committee created by the CFBC is considering all suggestions related to a review of the act.