The 30-second ad created by TBWA\London claimed: "So what's so great about 3G? It's what helps you get the news, really fast, find your way, really fast. And download pretty much anything, really fast.
"The new iPhone 3G. The internet, you guessed it, really fast."
During the voiceover, the ad showed a close-up of the product being used to surf online news, view the Google maps service and download a file.
All the actions had waiting times of only a fraction of a second, however an on-screen disclaimer stated: "Network performance will vary by location."
Several viewers complained that the ad was misleading because they believed it exaggerated the speed of the iPhone 3G.
Apple said the claims made in the ad were relative rather than absolute in nature.
The technology company pointed out that the opening line of the voiceover, "So what's great about 3G", positioned the content of the ad as a comparison of the new 3G iPhone with its 2G predecessor.
Apple said that mobile devices using 3G operated at substantially faster speeds, which meant that it was not misleading to implicate that the 3G iPhone allowed "really fast" downloads and internet access when compared to the previous generation.
Apple said that the average viewer would understand that a 30-second TV ad could not address every single experience and that the on-screen text "network performance will vary by location" underlined the potential for performance variations.
Clearcast, which cleared the ad for broadcast, said it believed viewers would understand that although the speed illustrated in the ad was achievable, it might not always be the case.
However, the Advertising Standards Authority ruled that despite the on-screen text disclaimer, the visuals, in conjunction with the repeated use of "really fast", were likely to "lead viewers to believe that the device actually operated at or near to the speeds shown in the ad".
It was therefore labelled misleading and was banned from appearing again in its current form.