The Twingo Dynamique falls into band C of the current Vehicle Excise Duty rankings with CO2 emissions of 135g/km.
While Renault argued that the slogan eco-nomical, eco-logical and the company's Eco2 logo were used only for cars that met certain criteria, which are explained on Renault's website, the ASA ruled the ad breached its code of conduct.
Renault has said it will not run the ad again or feature its tagline.
This is the latest in a string of ads the ASA has taken issue with on the grounds of questionable presentations of green credentials.