The Advertising Standards Authority (ASA) upheld five complaints in January that the ad, part of a campaign by Cycling Scotland, was irresponsible and harmful because it showed a cyclist without a helmet or any other safety attire riding down the middle of the road.
The ad said in a voiceover: "Not a lot of people know this but you should treat a cyclist the way you treat a horse ... slow down, treat them with care and give them their space on the road."
Cycling Scotland told the ASA that wearing a cycling helmet was not a legal requirement in Scotland but a personal choice for the individual - a fact it considered was reflected in the ad with footage of various cyclists with and without helmets.
Cycling Scotland also referred to its helmet policy, which discussed the possible undesired outcomes of wearing helmets, including limiting uptake of cycling and "influencing a driver's behaviour to be less careful when interacting on the road".
In relation to the cyclist's position on the road, Cycling Scotland said that given the width of the road in the advert, the cyclist was safer riding out past the parking area where they could be clearly visible to other road users.
It told the ASA the shoot for the advert was supervised by one of its most experienced cycling instructors.
The ASA said the cyclist in the final scene was not wearing a helmet or any other safety attire and appeared to be more than half a metre from the parking lane, ruling that the ad undermined the recommendations set out in the Highway Code and concluding that it was "socially irresponsible and likely to condone or encourage behaviour prejudicial to health and safety".
But the ASA later said there was a "potential flaw" in its ruling, and it lifted the ban while an independent review was carried out.
In today's ruling, the ASA said the cyclist was shown in broad daylight, in the centre of a fairly large lane without any traffic and clearly visible, and there was a large gap between her and the car which overtook her, adding that: "For those reasons, we considered that the cyclist had been placed in a suitable cycling position."
It also said that it was not a UK legal requirement for cyclists to wear helmets, but instead was a decision they could make at their own discretion, noting that the ad showed various cyclists with and without helmets.
The ASA acknowledged Cycling Scotland's reference to the National Cycling Charity report which included evidence that some drivers could be less cautious around cyclists wearing helmets because they perceived them to be less vulnerable.
The ASA said: "Therefore, we concluded that because it was not a UK legal requirement for cyclists to wear helmets and because the ad depicted a range of real-life situations in which motorists may encounter cyclists on the road for the purposes of educating them about the risks to cyclists posed by poor driving behaviours, we concluded that the ad was not socially irresponsible and likely to condone or encourage behaviour prejudicial to health and safety."
Cycling Scotland chief executive Ian Aitken said: "The advert shows drivers the correct amount of space to give when overtaking someone who is cycling.
"People cycle for a variety of reasons, and as such drivers will encounter people cycling in a range of clothing styles, some with and some without a helmet. So, regardless of the reason why someone is cycling, or what they are wearing while doing so, drivers need to slow down and give as much space as they would a car when overtaking a person on a bike.
"The ASA adjudication has led to a constructive debate on the correct amount of road space to give those who are cycling, as well as highlighting suitable road positions for those travelling by bike.
"We are pleased that the final adjudication has confirmed that the advert gives the correct guidance to people driving and cycling."