By Khurram Aziz | Dec 19, 2012 09:28 AM EST
The change, orchestrated by its parent company Facebook, allows advertisers on Instagram to use photos belonging to its 100 million users in targeted advertising.
"To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you," says Intagram's updated terms of service, which will come into effect from Jan. 16, 2013.
Instagram also says that the same terms apply to images uploaded by children under 18.
The Wall Street Journal has posted a string of Tweets from celebrities who have deleted their accounts in protest to the rule change.
Internet rights group, Electronic Frontier Foundation (EFF), is also protesting the change of terms.
"Instagram should reconsider this policy, because it conflicts with the three key principles we developed for social networking services: informed decision making, control and the right to leave," said EFF's staff attorney Kurt Opsahl.
However, Instagram has attempted to reassure its users on its blog, saying that nothing has changed about the ownership of its users' photos or who can see them.
"Our updated terms of service help protect you, and prevent spam and abuse as we grow," it added.
Facebook paid $1 billion to buy Instagram in April this year. The social network has itself been at the heart of concerns over privacy and its users' data recently. Last year it settled a complaint with the Federal Trade Commission after it agreed not to change privacy settings without consent from users.
Earlier this week Facebook went a step further to reassure its users, by introducing new tools to allow them to control their privacy more easily.