Laws covering the wearing of veils in public will not be introduced by the government but the prime minister continues to back the rights of institutions to ban the practice.
David Cameron has repeated his belief that it was for schools and other bodies to decide and enforce their own dress codes, including rules covering the wearing of veils.
But his official spokesman declared: "There is a position of principle here around the ability of institutions to set their own policies. But the prime minister does not believe parliament should legislate on what people do on their local high street.
"There are legal frameworks within which everyone must operate. There is no incompatibility between a free society and some institutions having a dress code," he said.
His statement came amid growing concerns over the wearing of veils in schools, courts and other institutions.
Home Office minister Jeremy Browne called for a national debate on the issue after Birmingham Metropolitan College reversed its eight-year ban on wearing of niqabs and burqas after a local campaign.
He said he was "uneasy" about restricting individuals' freedoms to observe the religions of their choice.
"There is a genuine debate about whether girls should feel a compulsion to wear a veil when society deems children to be unable to express personal choices about other areas like buying alcohol, smoking or getting married."
Deputy prime minister Nick Clegg said his "very strongly held view" was that the UK should not issue edicts or laws telling people what to wear.
But he added: "There are exceptions to that as far as the full veil is concerned - security at airports, for instance. It is perfectly reasonable for us to say the full veil is clearly not appropriate there.
"In the classroom, there is an issue of course about teachers being able to address their students in a way where they can address them face to face. I think it is quite difficult in the classroom to be able to do that."