In the ad from Leo Burnett, the group, who first released the song in 1991, joyously reform for a pub gig after realising Daz gets their T-shirts white enough to be sexy again.
Five people complained about the use of the word "sexy" and the suggestive movements of the group's lead singer.
Brand owner Procter & Gamble rejected the complaints.
The Advertising Standards Authority said it acknowledged the movements were "mildly suggestive" and that some parents may have felt uncomfortable explaining what "sexy" meant to curious children, but it viewed the ad as humorous rather than sexual.
It cleared the ad to be shown without any scheduling restrictions.