The ASA received 17 complaints about the advert from viewers as well as ISPs including Sky and Virgin Media. As BT could not provide evidence to support the claims, the ASA ruled it could mislead customers.
The ad, part of the on-going 'Adam and Jane' series of commercials, showed Adam being shown round a house by an estate agent while talking to Jane on the phone.
The ad was accompanied by a voice over that said "BT is rolling out up to 20 meg speeds to give you a consistently faster broadband throughout the day even at peak times".
Some of the complaints covered whether BT could actually back-up the 20Mbps claims, while others thought web browsing would not be any faster with the new service compared to the older 8Mbps connection.
"Because we had not seen sufficient evidence to support the claim that BT's new broadband service was consistently faster than its existing 8Mbps service even at peak times, we concluded that the ad was likely to mislead," the ASA said.
"We noted BT's new service was available to fewer than half of all households and the roll-out, increasing that figure to 75 percent, was anticipated to take around two years."
However, BT, which said it was "disappointed" by the ruling, claimed the sequence shown in the advert had not been intended to be an actual comparison.
"At the time the ads appeared, BT had just started rolling out a new 'up to' 20Mbps broadband service across the country and we wanted to highlight the higher speeds available in newly enabled exchange areas offering customers consistently faster web browsing in comparison to BT's 'up to' 8Mbps service," BT said.
"There was certainly no intention to mislead."
The ASA said the advert, which was accompanied by radio and press campaigns, must not be shown again in its current form.