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9 November 2018, 10:00 | Updated: 9 November 2018, 10:08
The supermarket's 2018 festive advert is deemed 'too political'.
Iceland's advert for Christmas was created with Greenpeace, and features an animated orangutan, and highlights the destruction of the rainforest by palm oil growers.
However, the advertising watchdog has declared that the short film breaks rules banning political advertising.
Earlier this year, Iceland revealed that they were the first major UK supermarket to remove palm oil from all its own-brand products.
Iceland's founder Malcolm Walker said: "This was a film that Greenpeace made with a voice over by Emma Thompson.
"We got permission to use it and take off the Greenpeace logo and use it as the Iceland Christmas ad. It would have blown the John Lewis ad out of the window. It was so emotional."
The watchdog said in a statement: "Clearcast and the broadcasters have to date been unable to clear this Iceland ad because we concerned that it doesn’t comply with the political rules of the BCAP code.
"The creative submitted to us is linked to another organisation who have not yet been able to demonstrate compliance in this area."
Meanwhile, there have also been Christmas adverts for Heathrow (the return of the bears), Aldi (the return of Kevin the Carrot) and Boots (showcasing the special bond between mothers and daughters) among others.
John Lewis, Sainsbury's and Marks & Spencer are expected to launch their festive adverts in the coming week.