The BBC has dropped Trash by Andy Mulligan from the 'Favorite story' category of the 2011 Blue Peter Book Awards. The revised shortlist will be revealed later on today.
Acclaimed by critics, adventure story Trash focuses on three young boys who work on a rubbish dump in a poor and corrupt Third World society.
However, the corporation decided that the book should never have been shortlisted as it was "not suitable" for the target audience of children as young as 6.
"Trash, by Andy Mulligan, should not have been shortlisted for the Blue Peter Book Awards because it contains scenes of violence and swearing that are not suitable for the younger end of our audience," said the BBC.
"We regret the mistake that was made in the initial judging but we do not believe the book is appropriate for children as young as 6."
Speaking to The Daily Telegraph, Mulligan expressed his disappointment at the BBC's move, which he claimed was made out of "fear".
"Trash is challenging but it's also uplifting and along the way it reveals a world that the West needs to know about. The boys are heroic, resourceful and dangerous," he said.
"And they don't just survive - they fight and win. The BBC could have been brave and risked a little controversy - entirely in the interests of stretching readers. That's what the judges wanted I presume."
He added: "Sadly the fall-back position is one of fear. It's part of the insidious process that bans snowball fights.
"More worryingly it suggests children need to be protected from any idea that isn't trite and that the Third World is a fabulous Blue Peter topic as long as the poor are presented as peace-loving, helpless and grateful."
The situation follows controversy on Blue Peter in 2007 after program-makers admitted to overruling a public vote to choose the name of a cat on the show.