Mr Jaitley had told Rajya Sabha today that PM Modi had not questioned his predecessor Dr Manmohan Singh's commitment to the nation.
"The Prime Minister in his speeches didn't question, nor meant to question the commitment to this nation of either former PM Manmohan Singh or Former VP Hamid Ansari, any such perception is erroneous, we hold these leaders in high esteem, as well as their commitment to India," said Arun Jaitley in his statement.
Late in the evening, Mr Gandhi tweeted, "Dear Mr Jaitlie - thank you for reminding India that our PM never means what he says or says what he means." The tweet was accompanied by a video of the relevant portion of the Prime Minister's "conspiracy with Pakistan" speech, made at the height of the campaign for Gujarat assembly elections.
The speech had triggered an uproar by the Congress, which was taken up by other opposition parties.
The government had ruled out either option.
The impasse ended today with Mr Jaitley's short statement - the result of last week's hectic parley between key leaders of the BJP and the opposition.