The billboard, which has kicked up a storm in the U.K., showed a slender woman in a bikini next to the words: "Are you beach body ready?" Earlier this week, Protein World claimed it had received bomb threats relating to the campaign, which was due to come to an end this week.
While the ASA has not officially banned the advertisement or ruled against it, the watchdog said it would not be allowed to appear in its current form.
"Although the ad won't appear in the meantime, we've launched an investigation to establish if it breaks harm and offence rules or is socially irresponsible," the ASA said in a statement.
"We will now carefully and objectively explore the complaints that have prompted concerns around body confidence and promptly publish our findings."
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A petition against the ad, which promoted a weight-loss and meal replacement product, has been signed by over 67,000 people. The ASA received 368 complaints.
However, the company behind the ad, Protein World, has received a large amount of support from fans on social media websites like Facebook and Twitter.
Meanwhile, other companies have released parodies of the ad,with brewer Carlsberg using the slogan: "Are you beer body ready?"
Swimsuitsforall, which sells swimwear up to a U.S. size 34, released an ad featuring the plus-sized model Ashley Graham in a similar style to the Protein World campaign.
"Swimsuitsforall believes that everybody is a beach body and has countered with a question of its own: 'Are you ready for this beach body?'", the company said.
Protein World did not respond to requests for comment from CNBC.