The actress was arrested from a high end hotel at the Banjara Hills in Hyderabad.
She reportedly told the police that she turned to the flesh trade because no films were coming her way and she had run out of money.
The Task Force sleuths had busted a prostitution racket on August 31 at a hotel in Banjara Hills area, which allegedly involved the Shweta.
Balu, an assistant director in Tollywood who acted as her agent, was arrested.
Additional Deputy Commissioner of Police N Koti Reddy today said during questioning the actress revealed that she got into prostitution as she was not getting film offers any longer, and was financially in dire straits.
"The actress is a victim; she has not been arrested. She has been sent to a rescue home, while Balu was arrested under Prevention of Immoral Trafficking Act," Reddy said.