Moss, who is to model one of H&M's upcoming clothing lines, has apologized for her drug use and promised in writing to abide by a company policy that models be "healthy, wholesome and sound," spokeswoman Liv Asarnoj said.
H&M had decided to keep Moss on, Asarnoj told The Associated Press in a phone interview from the company's headquarters in Stockholm, Sweden.
"We strongly disapprove of her action," Asarnoj said. "We feel that this is very unfortunate."
Asarnoj said Moss had acknowledged the allegations of drug use were true.
"That's why she was so regretful," Asarnoj said. "We are giving her a second chance."
Noelle Doukas, who answered the phone at the Storm modeling agency in London, which represents Moss, 31, said no one there was available to comment on the allegations, which have filled Britain's newspapers.
The Daily Mirror tabloid printed images from a video which it said showed the model doing five lines of cocaine in 40 minutes at a late-night music recording session, preparing them with a credit card and snorting the drug through a five-pound note.
The tabloid said the video was made at a West London recording studio last week during "a Mirror undercover investigation," but gave no further details.
The newspaper said Moss had taken a large amount of cocaine out of her handbag. Her boyfriend Pete Doherty, the musician whose alleged drug problems and brushes with the law have made headlines for months, was also present, the paper reported.
The Mirror said Moss had shouted obscenities when one of its reporters asked her for comment on the allegations outside a restaurant in New York, where she was attending the city's Fashion Week shows.
Moss won an apology and an undisclosed settlement from the Sunday Mirror in July over a story it ran in January alleging that she had collapsed into a cocaine-induced coma in Barcelona in June 2001.
Her lawyer Gerard Tyrrell said then that the charges were untrue.
Tyrrell did not return a message left at his office Saturday.