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The Home Office said: "We have always been clear that this campaign was about encouraging illegal immigrants to leave the country voluntarily and was not targeted at particular racial or ethnic groups.
"In respect of the ASA's other findings, we can confirm that the poster will not be used again in its current format."
The Advertising Standards Authority said those who saw the poster would understand the claim "106 arrests last week in your area" to mean that during the previous week 106 people in the area - in which they saw the poster - had been arrested under suspicion of being in the UK illegally.
A Home Office campaign in London urging illegal immigrants to "go home" has been banned for using misleading arrest statistics. The campaign, which involved vans driving through six London boroughs in July and drew 224 complaints to the Advertising Standards Authority.