The Advertising Standards Authority said the advert implied East Jerusalem, which has been occupied since 1967, was part of the state of Israel.
The wall, one of Judaism’s holiest sites, is in occupied East Jerusalem, but is a major tourist site for most visitors to Israel.
Israel’s tourism ministry said it would have been misleading to exclude it.
The ASA said they received one letter of complaint about the advert, which appeared in UK newspapers.
The ruling follows another case in 2009 where the ASA criticised Israeli tourist authorities for running an advert on the London Underground which appeared to show Gaza, the West Bank and the Golan Heights as part of Israel.
By a picture of surfers in Tel Aviv, the latest advert said: “You can travel the length of Israel in six hours, imagine what you can do in four days.”
At the bottom of the advert was a small picture of the Western Wall, part of the complex known to Jews as the Temple Mount and Muslims as Haram al-Sharif.
The Dome of the Rock can be seen in the background of the picture, which is titled “Day two, Jerusalem”.
It is entirely accurate to assert that a visitor to Israel could visit Jerusalem as part of a short visit
Israel’s Ministry of Tourism
The ASA ruling said: “Readers were likely to understand that the places featured in the itinerary were all within the state of Israel.”
“We understood, however, that the status of the occupied territory of the West Bank was the subject of much international dispute, and because we considered that the ad implied that the part of East Jerusalem featured in the image was part of the state of Israel, we concluded that the ad was likely to mislead.”
But the Israel’s Ministry of Tourism has refused to accept the ruling.
A statement in response said the ad provides “basic, accurate information to a prospective UK visitor”.
“It is entirely accurate to assert that a visitor to Israel could visit Jerusalem as part of a short visit. Had the ad omitted a reference to a visit to the city of Jerusalem, it would have been incorrect and potentially misleading.”
The advert in 2009 received more than 400 complaints.
Palestinians want East Jerusalem for their future capital, but Israel insists the city cannot be divided.
The status of the holy sites is one of the most controversial issues that will have be solved in any eventual peace deal.
Nearly 500,000 Jews live in more than 100 settlements built since Israel’s 1967 occupation of the West Bank and East Jerusalem.
They are considered illegal under international law, although Israel disputes this.