Price had appeared in lingerie photos to mark the 12th anniversary of the store's Tickled Pink campaign.
The photo shoot was featured in the reality show 'What Katie Did Next', in which Price was seen making a remark about scars on her breasts caused by implants.
The comment drew a furious reaction from hosted by the charity Breast Cancer Care.
Asda responded directly to the members through spokeswoman Leah Watson, who posted a news release on a forum on Friday night.
Watson said: "Nobody was happy with what Katie said on the show, especially us. I know you feel like we don't listen, but we do. We were extremely grateful for her contribution to both breast cancer charities - it's a lot of money that clearly helps.
"The last thing we want to do is upset anyone and so in light of the conversations we have all had over the past couple of days we won't be using Katie in any publicity shots. The lingerie range will still be in store so that there is still have the chance to raise money."
Watson also appealed for people to come forward to become involved in next year's advertising campaign.
She added: "Thanks for your time and your feedback, perhaps you want to get in touch with me to be involved in our campaign next year? You can help shape what it might be so that we can continue to raise as much money as possible."
Asda's decision to engage directly with the public via social media marks the second time this month the grocer has harnessed the power of social media to protect its brand image.
Two weeks ago, featuring staff in its Fulwood branch airing their reaction to a former employee who had posted a video of himself running riot in the store.