The poster for perfume company Tom Ford Beauty, on the corner of Brick Lane and Hanbury Street in East London, shows the woman lying naked on her front.
A complaint had been made to the Advertising Standards Authority (ASA) by a member of the public who said it was unacceptable the image was so close to a church.
There was also a concern that it was around 100 metres from a mosque and that it objectified women but Tom Ford Beauty said it was "sensuous but not sexual".
The ASA agreed that it was not sexually explicit but did say it was sexually suggestive adding that a placement restriction was unnecessary because it was not near a school.
In its ruling it said: "We understood that because of its size and location on a busy urban street, the ad would be very noticeable to passers-by and that attention would be drawn to the poster space regardless of its content and that in this case it may have been more noticeable because the model was clearly naked.
"However, we noted the ad did not appear within the immediate vicinity of a place of worship and that the area in question was a busy, diverse and popular area of London.
"We therefore considered the ad had not been placed inappropriately.
"Whilst we understood some viewers may have found the image distasteful because of the nudity shown and implied, we considered the image itself was unlikely to cause serious or widespread offence and that it did not degrade or objectify women."
The church in question, Christ Church Spitalfields, has been contacted for comment.
Amelia Abplanalp from the Evangelical Alliance told Premier's News Hour there was a wider issue.
"We need to be look at the overall issue here in terms of what our ads are saying," she said.
"So not whether they're close to a church or not but actually should we be having these sorts of ads at all?
"What's concerning is what this is teaching our young boys, for example, in terms of the way that they value woman and the way they perceive woman.
"The sexualisation of woman in these ads is really concerning."
Amelia Abplanalp speaking to Des Busteed on the News Hour: