China regularly blocks websites that do not agree with government views.
The new code encourages bloggers to register with their real names and personal details, and promises to provide better services for those who do so.
The blog phenomenon
Bloggers have now broadly welcomed the new code.
Ping Ke, one of the most famous bloggers and podcasters in China told the BBC that the government's change of plans is a big improvement.
"They are not forcing, but suggesting and encouraging people to do things now."
Another famous blogger, Wang Xiaofeng, is opposed to bloggers being forced to register their real names.
"I'd rather have the bad language than real-name registration," he writes.
"Uncivilised is one of the characteristics of the internet. We are uncivilised, and the internet reflects that fact."
Fang Xingdong, The chairman of Bokee, one of the first blog providers in China, also told the BBC that the government made a rational decision to let bloggers stand on their own.
"The new code won't bring in any new changes, we won't be providing any new services for people who want to register with their real names. People would rather write anonymously and we respect that."
Blogging has gradually become a way for people to find out information in China.
Popular blogs get millions of hits every day, reposting information that can not get through in mainstream media.
The government had been arguing that real-name registration would protect internet users from libel, pornography and dissemination of other ¿harmful¿ information.