More than 100 people complained to the Advertising Standards Authority (ASA) about the ad for SMA Progress, claiming it did not make it clear to viewers that it was for follow-on formula, which is aimed for infants over six months old.
The advert shows a woman walking around her bedroom at night holding a baby while a man sleeps in the bed.
A male voice over says: " I promise not to pretend I am asleep when our baby wakes up… " before cutting to a scene with the same man falling asleep next to a kettle and a tin of SMA Progress.
The voiceover continues with: " I promise to do at least my fair share of nappy changing and night feeding…" .
A voiceover then states: "Understanding parents, understanding babies.
For infant nutrition trust the experts.
SMA, we know."
People also complained that the advert was misleading and harmful as it did not make clear that breastfeeding was the preferred option for mothers.
The market for formula milk is worth some €597m and increasingly companies are looking at how they can best replicate the healthy profile of breast milk with the use of ingredients.
Germany's Hipp GmbH & Co Vertrieb KG, for example, have used probiotic bacteria to use in certain baby food products marketed in Europe.
Others are adding omega-3 fatty acids, and prebiotics.
Infant formula companies say the aim is to give babies that are not breastfed the best nutrition at the start of their lives.
SMA said its Progress brand was the first follow-on formula to be launched in the UK, and had been designed to complement weaning by containing iron and vitamins.
Lobbyists hit out at the ASA - who did not uphold any of the complaints - and said they had "failed in their responsibility to protect the public."
Baby Milk Action co-ordinator Mike Brady said: " This is not an argument over soap powder or chocolate bars, it is about live-long issues of health.
"The ASA has already demonstrated the regulatory system for breastmilk substitutes in the UK is not fit for purpose and proposed changes to the law expected this week are unlikely to make much difference as the government has so far ignored the recommendations of its own advisors, health worker bodies and other health experts to follow the industry line."
SMA, owned by John Wyeth and Brother, defended the ad.
It said text stating SMA Progress is "Not intended to replace breast milk " had appeared for five seconds.
The firm also said the script had been carefully chosen to avoid giving the impression children were under six-months old.
SMA Progress was aimed at the over six-months to complement weaning.
The gold standard for infant nutrition advertisement is set out in the International Code of Marketing of Breastmilk Substitutes.
This code prohibits the advertising of breastmilk substitutes and bans companies from seeking direct or indirect contact with pregnant women and mothers of infants and young children.
Follow-on formula advertising is permitted by current UK law, but adverts aimed at under six-month's are not allowed.
This situation has been called a " loophole " by Unicef, National Childbirth Trust (NCT) and Save the Children.
These charities said follow-on formula was invented to evade those restrictions and " permit manufacturers to push other products and materials that share the same brand name and logo."