Rona Ambrose, minister for the status of women, signalled the federal government's intentions today.
The Ontario Superior Court ruled the laws are unconstitutional because they're contributing to the danger faced by sex-trade workers.
The decision is being hailed as an emancipation for sex-trade workers.
The judge found that laws against keeping a common bawdy house, communicating for the purposes of prostitution and living on the avails of the trade "are not in accord with the principles of fundamental justice."
The lawyer for the sex-trade workers says the judgment, however, is subject to a 30-day stay during which the law remains in place, adding the federal government can seek an extension of that stay period.
Dominatrix Terri-Jean Bedford says it's like emancipation day for sex-trade workers.
Bedford, one of the women behind the challenge, says the ball is now in Prime Minister Stephen Harper's court.
In her ruling, Justice Susan Himel said it now falls to Parliament to "fashion corrective action."
"It is my view that in the meantime these unconstitutional provisions should be of no force and effect, particularly given the seriousness of the charter violations," Himel wrote.
"However, I also recognize that a consequence of this decision may be that unlicensed brothels may be operated, and in a way that may not be in the public interest."
While the ruling strikes down those key Criminal Code offences — which deal with adult prostitution — it does not affect provisions dealing with people under 18.
Prostitution was not illegal in Canada, but the Ontario Superior Court struck down three provisions that criminalized most aspects of prostitution.
"These laws, individually and together, force prostitutes to choose between their liberty interest and their right to security of the person as protected under the Canadian Charter of Rights and Freedoms," Himel wrote her in decision.
The challenge was brought Bedford and two other sex-trade workers who said the provisions forced them from the safety of their homes to face violence on the streets.
The federal government had argued that prostitution is inherently dangerous, no matter where it is practised.
The government also warned that Canada could become a sex tourism destination if prostitution-related activities are decriminalized.
The Christian Legal Fellowship, which was granted intervenor status, argued the provisions reflect society's views that prostitution "offends the conscience of ordinary Canadians."
Bedford's "Bondage Bungalow" north of Toronto was raided by police in 1994 and she was convicted of keeping a common bawdy house in 1998.