Britain's advertising watchdog banned an Israeli government tourism advert for suggesting that the Old City of Jerusalem was part of Israel on Wednesday.

The newspaper brochure showed a panorama of the walled Old City with the text "Israel has it all", and was ruled misleading by the Advertising Standards Authority (ASA), which said it implied the UNESCO World Heritage Site was part of Israel.

The international community regards the Old City as occupied Palestinian territory, while Israel has claimed it as part of its capital.

The dispute is an emotional subject as the area contains places precious to Christians, Jews and Muslims, including the Church of the Holy Sepulchre, Western Wall and al-Asqa Mosque.

Following a complaint, the ASA ruled the title of the brochure "Israel Land of Creation" and references to Old City attractions was misleading and banned the advert from appearing again in its current form.

"We understood that the status of the territories in question was the subject of much international dispute," the watchdog said.

"We therefore considered the presentation of the ad would mislead consumers into believing that the Old City of Jerusalem was part of Israel and into taking a transactional decision that they would otherwise not have taken."

The brochure included a photograph showing the golden Old City landmark and Muslim shrine the Dome of the Rock, with the modern buildings of Western Jerusalem in the background.

Text on the image read: "Everyone falls for the Old City, with its narrow (and car-free) alleys, teeming pilgrims and bazaar-like buzz."

In its defence, the Israeli Government Tourist Office denied that the brochure implied East Jerusalem and its Old City were part of the state of Israel.

"They said the ad did not seek to make a political statement and believed it would be inappropriate for it to do so," the ASA ruling stated.

"Rather, they believed the leaflet provided practical information that made clear that visitors to the places referred to in the ad, such as the Old City of Jerusalem, could only be visited via travelling to Israel."