The apex court on 4 November had banned all construction and demolition activities in Delhi until further orders.
The national capital has been grappling with dangerous levels of pollution since end of October. Apart from stubble burning in the adjoining states of Uttar Pradesh, Punjab and Haryana, construction and demolition activities are among the major contributors to pollution in the region.
On Friday, the apex court lifted its interim order imposing a complete ban on construction, industrial activities and cutting of trees in the Taj Trapezium Zone (TTZ).
A bench, headed by Chief Justice Sharad Arvind Bobde, said non-polluting industries with proper clearances and those complying with rules can be allowed to take up such activities. However, the bench said the ban on heavy industries will continue, according to a report by news agency ANI.
The court also allowed the Uttar Pradesh government to consider application for environmental clearances based on environment impact assessment.
Environmentalist MC Mehta had filed a plea for protection of Taj Mahal, the fragile eco-system surrounding it and construction in the Taj Trapezium Zone, which has four world heritage sites, including the Taj Mahal.