The ad, part of the agency's "it's what's inside that counts" campaign, features a woman with an overbite. She reveals large gums as she smiles, and is shown being nuzzled by a handsome man.
YWCA, formerly known as the Young Women's Christian Association, has attacked the ad as insensitive.
"Young women feel under tremendous pressure to conform to society's ideals. Our job is made much harder by an ad like this, which does seem to mock women who aren't conventionally beautiful," a YWCA spokeswoman said.
Trevor Beattie, the chairman and creative director of TBWA, defended the ad, arguing that the spot uses the same advertising structure as that employed by disability charities' work.
"The theme of the campaign is crystal clear: judge the person, not the appearance. I find it deeply ironic that we're being accused of being disrespectful when every disability charity in the land has at some point run with the notion 'judge the person, not the disability'," he said.
"Odd, isn't it, that if we replace the Holsten logo with that of a cause, there would be no problem? Judge the execution in the context of the campaign."
A spokesman for Holsten Pils said: "We honestly feel that our advertising is not dictated by the norms of conventional beauty.
"The essence of this particular advertising campaign was to encourage consumers to look for inner qualities - which, in our case, is the quality of the liquid inside the bottle."
The Advertising Standards Authority has only received one complaint about the Holsten Pils ad, which was not upheld.