A magazine ad featuring Twiggy was "misleading" said The Advertising Standards Authority (ASA).
The ad for Olay Definity eye illumination gave an untrue impression about the cream's effects because the photo of the model had been airbrushed.
The advert for the Olay Definity eye illuminator carried a testimonial from the model crediting it as her "secret to brighter-looking eyes".
Ms Swinson said she hoped the ASA's decision would bring airbrushing in advertising "under control
But the ASA received more than 700 complaints regarding the 'airbrushed Olay ad, leading to makers Procter and Gamble Ltd, admitting to "minor retouching".
The company went on to say Twiggy was a "beautiful woman" and alterations were "inconsistent" with its policies, and have voluntarily replaced original with one that had no "post-production" work in the eye area.
Procter and Gamble denied the advert could have negative perceptions on people's body image and rejected claims it was "socially irresponsible".
More than 700 people complained about the "digitally re-touched" image in a website campaign set up by Jo Swinson, the Scottish Liberal Democrat MP.
In its ruling, the ASA agreed the advert was not socially irresponsible, and said no further action was required because the image had already been withdrawn.
It said it accepted advertisers were keen to present their products in their most positive light, often using techniques such as post-production enhancement and the re-touching of images.
"However, we considered that the post-production re-touching of this ad, specifically in the eye area, could give consumers a misleading impression of the effect the product could achieve.
"We considered that the combination of references to 'younger looking eyes', including the claim 'reduces the look of wrinkles and dark circles for brighter, younger looking eyes', and post-production re-touching of Twiggy's image around the eye area, was likely to mislead," it said.
Ms Swinson said she hoped the ASA's decision would bring airbrushing in advertising "under control".
"Experts have already proved that airbrushing contributes to a host of problems in women and young girls such as depression and eating disorders.
"They shouldn't constantly feel the need to measure up to a very narrow range of digitally-manipulated pictures," she said.
A Procter and Gamble spokesman said: "It's accepted industry practice in advertising to choose beautiful women such as Twiggy, as models, and to use cosmetics, hair styling and lighting to show them at their best.
"The Definity advertisement was placed only in magazine titles aimed at mature women, to whom Twiggy is relevant."
Tagged in Twiggy