Most of the time, counseling and psychotherapy refer to the same thing. In all probability, there is some counseling and some psychotherapy intermittently taking place in the course of any single therapeutic hour.
Technically, the word counselor means advisor, or one who advises or teaches. In counseling it is understood that two individuals are putting their heads together in an intellectual manner in order to solve a problem. Therefore, we could say that counseling is that which provides advice, or is conducted in such a manner that one is actually taught or given information in a didactic way. The term counseling is commonly used in conjunction with other professions, such as legal counselor, or financial counselor, or spiritual counselor. There are even references in the Bible to Christ as Counselor.
Psychotherapy, on the other hand, is a term that, generally speaking, refers to the "treatment of mental and emotional disorders through the use of psychological techniques designed to encourage communication of conflicts and insights into problems, with the goal being personality growth and behavior modification" (American Heritage Dictionary).

However, the use of the terms "mental and emotional disorders" above may be viewed as archaic. Over the last few years a growing number of therapists and theorists have viewed the traditional pathology or medical-model based definition of mental and emotional disorders as being too narrow and inaccurate. Instead, this newer model relies on the "narratives" or "stories" that individuals relate which describes their difficulties in terms of the context and belief systems in which they occur.

This paradigm shifts the person of the expert from the therapist to the client, that is, the client knows more about their own difficulty than does the therapist or counselor. It also means that the strengths of the client are viewed by the professional as being crucially important to the process of reaching a point of balance. As a consequence, the client is considered the ultimate teller of their own story, and the chief guide through their course of resolving their pain with the assistance of a therapist or counselor.

Irrespective of the approach to which one subscribes, the differences between psychotherapy and counseling do exist. The interchangeable use of the terms, however, typically sparks neither controversy nor confusion.