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The short film showed a pair of unsuspecting potential male customers taking the new car for a test drive where the salesman requests the driver "hit the Va Va Voom button".
At a junction, the road around the car suddenly transforms into a Parisian high street thanks to a group of actors and some clever props.
All is well until a troupe of burlesque dancers decked out in lacy lingerie start gyrating around the vehicle.
The French car-maker insisted that the sexy dancing was simply a parody of a typically French Moulin Rouge-style cabaret scene but, after just one complaint, it has been ruled as 'objectifying the dancers by portraying them as sexual objects' and will no longer be shown in its current form.
Not surprisingly, the short clip has been an Internet sensation and has been viewed over 3.5 million times on YouTube but Renault has respected the ASA's decision and 'censored' the offending scenes on their YouTube channel.
A similar advert featuring a female driver and a group of bare-chested, gyrating men, has been watched nearly a million times but received no complaints and is therefore free to continue to be aired, the ASA confirmed.
The ASA said: "We considered that the length of the scene in question, along with the change in the music and the use of slow motion shots, meant it had a different tone to the rest of the ad.
"We accepted that the Moulin Rouge was associated with Paris and that a scene that referenced it could therefore have some relevance to the theme of the ad, if not to the product itself."
But the watchdogs added: "However, we were concerned that the ad featured a number of shots of the women's breasts and bottoms, in which their heads were obscured, and which we considered invited viewers to view the women as sexual objects."
This isn't the first time Renault has landed itself in hot water, back in 2003 an advert for the Renault Megane was not permitted to be shown before 7.30pm because it featured close-ups of bottoms accompanied by Groove Armada's song 'I See You Baby (Shaking That Ass)'.
Like most things on the World Wide Web, the video is still readily available to watch. Take a look below if you're intrigued.