The Advertising Standards Agency yesterday ordered BT to pull its broadband advert, branding it "misleading" to viewers.
BT's advertisement stated that its ADSL connection was up to 40 times faster than a standard dialup internet connection.
The complaint, brought by service provider Telewest, argued that the connection speed was exaggerated, claiming said domestic customers could only obtain a service up to 10 times faster than ordinary dialup.
The ASA upheld the complaint.
The 2Mbps (megabits per second) service to which BT referred was 40 times faster than a standard 500Kbps home connection. But this service was only available to business and not to home users as the advertisement had implied.
In a statement Telewest said BT had been "caught speeding" and shunned its false advertising campaigns.
Two other complaints — brought by campaigners at Broadband4Britain
and a member of the public over BT's assertion it had connected over 60 percent of homes and offices to broadband exchanges — were thrown out.