The newspaper advert, which was placed in six national newspapers in April, was called Act Now to Stop this Cruelty and appealed for public support for Animal Aid’s campaign to have closed-circuit television cameras installed in every British abattoir.
The advert included a photograph, which was labelled "undercover video", of a man as he appeared to stamp on a pig while holding an electric prod.
The ASA ruled that two aspects of the advert - claims that slaughterhouses regularly ignore the law and that there was no effective monitoring system in place - were misleading. It ruled that the advert should not appear again in its current form.
Andrew Tyler, director of Animal Aid, said in a statement that the adjudication was "irrational and immoral".
He said: "The Advertising Standards Authority, by taking the comfortable route of endorsing the status quo, has struck a ringing blow on behalf of animal cruelty.
"Animal Aid’s slaughterhouse campaign will continue with more determination than ever."