Counter - something that is opposite or contrary to something else.
Conditioning - a process of changing behavior by rewarding a subject each time an action is performed until the subject associates the action with pleasure.
Counter conditioning is a highly effective way to alter a dog's response. It is commonly used to change how a dog reacts to a specific stimulus by changing the meaning of it.
Example: Your dog is terrified by the vacuum cleaner. Every time you try to vacuum your dog runs for the hills, hides under the bed or behind the couch.
Like most rehabilitation type behavior modification, baby steps in progression should be used to best facilitate success. Depending on your dog's response you may want to start by just bringing the vacuum out of the closet or just open the vacuum cleaner closet. Then link an enjoyable activity to it. Maybe the closet door opens and you pull out your dog's leash. Maybe it means feeding time or time to play catch.
This should be done until you are seeing a positive response from your dog. Next would be to pull out the vacuum and create the same activity - feeding, playing, walking. etc.
The goal would be - each time you pull out the vacuum, your dog associates it with something wonderful. You start small and slow, only moving on to more intense work with complete success at each stage.
Like desensitizing, counter conditioning is about association. Counter conditioning is typically used to re-associate the stimulus that causes a fearful or stressful response. It is on e of most useful tools in positive behavior modification.