The ad was banned earlier this week by the Broadcast Advertising Clearance Centre as it was deemed offensive to George W Bush and was said to break ITC privacy rules.
The Independent Television Commission has now said that the ad, which was promoting a Christmas video for '2DTV', should not have been banned.
The ITC said that the BACC may have been over-zealous in its approach, according to a report in the Daily Telegraph.
The seven-second spot showed US president Bush receiving one of the videos as a present. Bush is then heard saying: "My favourite, just pop it in the video player." He then drops the video into the Oval Office's toaster and proceeds to burn the VCR tapes to a crisp.
The BACC told '2DTV' that "the portrayal of George W Bush in the commercial is offensive" and that it contravened the advertising standards code of the ITC under the section headed "protection of privacy and exploitation of the individual".
The ITC said that it will now call on the BACC to be more flexible when "interpreting the ITC's code".
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