Leader Nigel Farage unveiled the advert which showed long queues of migrants walking through the European countryside under the slogan "Breaking Point".
UKIP Parliamentary spokesperson and Christian Suzanne Evans told the News Hour it was a "bad move" but warned the EU referendum was "not about a poster" or Nigel Farage.
"This is a referendum on whether we stay or leave the European Union, it is a referendum on Britain's future," she said.
"I think the media can tend to run off in all directions instead of focusing on the real issue - the real issue is who governs Britain".
The people on the poster were not EU migrants, she said, and nobody was suggesting genuine refugees from conflict should not be offered asylum.
She admitted it was an "unhelpful distraction" but said: "We've had unhelpful distractions all through this campaign.
"That's what the Remain camp has been very good at. I think they've run a very dirty campaign, they've run a very nasty and aggressive campaign."
The poster was released last week but was put back in the spotlight by Conservative peer Baroness Warsi who said she was switching her support from Leave to Remain complaining that moderate voices in the Brexit campaign have been drowned out by "lies and xenophobic campaigning".
Her decision was sparked by what she called the "indefensible" poster released by Ukip leader Nigel Farage, as well as "lies" from Michael Gove over the prospect of Turkey joining the EU.
But her defection was greeted with bemusement by the Leave campaign, with senior figures saying they were not aware that she had ever been a supporter.
Ms Evans, who is also a board member of Vote Leave, told the News Hour she was "totally bewildered" because none of the board knew the peer was a supporter of Brexit.
She said: "We're complete mystified about how she's managed to defect, we think you have to join something before you leave it, as far as we're concerned she never actually joined.
"It's totally bewildering.
"Sayeeda Warsi is talking about xenophobia in the Leave camp, well did she not read the Conservative In leaflet?
"A horrible leaflet they put out saying one of the benefits of staying in the European Union was that we could keep people out of Britain from the rest of the world.
"It's that wonderful saying, before you take the speck out of my eye look at the log in your own".
Lady Warsi told The Times: "That 'breaking point' poster really was - for me - the breaking point to say, 'I can't go on supporting this'.
"Are we prepared to tell lies, to spread hate and xenophobia just to win a campaign? For me that's a step too far."
She told BBC Radio 4's Today programme: "This kind of nudge-nudge, wink-wink xenophobic racist campaign may be politically savvy or politically useful in the short term, but it causes long-term damage to communities.
"The vision that me and other Brexiters who have been involved right from the outset, who had a positive outward-looking vision of what a Brexit vote might mean, unfortunately those voices have now been stifled and what we see is the divisive campaign which has resulted in people like me and others who are deeply Eurosceptic and want to see a reformed relationship feel that they now have to leave Leave."
Premier's Alex Williams speaking to Suzanne Evans: