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8 year oldThe picture featured plus-sized model Tess Holliday wearing a bikini.
The social network said the advert, for the event designed to promote body positivity, "depicts a body... in an undesirable manner".
Facebook added that while the event page would not be taken down, the advert would not be approved.
So while the picture is still visible on the page itself, the event is not being promoted elsewhe-re on the platform.
"Ads like these are not allowed since they make viewers feel bad about themselves," read the response f-rom Facebook's Ads Team.
It also suggested that an al-ternative image of someone "running or riding a bike" would be more appropriate.
Facebook told the BBC it was investigating the matter.
Its terms and conditions state that images used in advertising may not "show excessive amounts of skin or cleavage".
Jessamy Gleeson, one of the producers of the Melbourne-based "Feminism and Fat" event, told the BBC she was furious.
"They're not policing women's bodies when it comes to acceptable standards of beauty elsewhe-re," she said.
"I can see that they were attempting to try to tackle eating disorders - that makes sense - but at some point you have to consider that women of different weights exist on Facebook."
The group had contacted Tess Holliday's management for permission to use the image but had not received a reply, she said.
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