The Chelsea defender had last week succeeded in securing an interim injunction against a newspaper publishing details about his alleged relationship with a "famous" woman.
But on Friday, the judge, Mr Justice Tugendhat, lifted the order, saying the information had become so widely available to so many people "it meant that an injunction was less necessary or proportionate than would otherwise be the case", the Press Association reported.
The judge suggested the claim was "essentially a business matter" for LNS and if he was worried about his sponsorship deals then "damages would be an adequate remedy if LNS succeeds at trial".
The judge also said the newspaper, the News of the World, should have been given notice about LNS's intention to seek an injunction.
"Freedom to live as one chooses is one of the most valuable freedoms," he said.
"But so is the freedom to criticise - within the limits of the law - the conduct of other members of society as being socially harmful, or wrong."
A Chelsea spokesman told Reuters: "This is a personal matter for John Terry. The club will give John and his family all the support they need in dealing with it."
