The 45-second ad featured an ill-looking man sitting on a bed talking about the choices he has made in life.
'I chose to marry Tina, have two great kids. I chose to always drive a Ford,' the actor says. 'What I didn't choose is being terminally ill.
'I didn't choose to starve to death because eating is like swallowing razor blades. I certainly didn't choose to have to watch my family go through it with me. I've made my final choice. I just need the government to listen.'
The ad was rejected by Free TV Australia, which regulates all advertising material for free-to-air commercial stations, saying it would probably breach television's code of conduct.
The code 'states that material which promotes or encourages suicide will invariably be unsuitable for television,' it said in a statement.
'Free TV Australia expresses no view on the ethical and legal debate surrounding voluntary euthanasia and has no interest in suppressing debate on this sensitive issue,' it added.
Veteran euthanasia campaigner Philip Nitschke said his Exit International, which made the ad, had since submitted a shortened version for approval and would press ahead with accompanying billboard ads.
He rejected the proposition that the ad promoted suicide, describing it as a political statement about the fact that euthanasia was illegal in Australia.
'It's not an ad that tries to urge people to have euthanasia,' Mr Nitschke said of the ad.
'What it is is an ad that's supposed to urge people to go down and get their politicians to do something about unsatisfactory existing legislation.'
He said Exit decided to use an actor for the campaign after a previous ad in 1999 featured a woman diagnosed with bladder cancer who went on to live for another two years, after her disease went into remission.
Australia's Northern Territory introduced the world's first voluntary euthanasia legislation in 1995 but it was overturned by the federal government and euthanasia remains a crime in the country.
Mr Nitschke said that most Australians wanted the reintroduction of voluntary euthanasia laws as a 'safety net' though only a very tiny proportion of people would ever use them.SIC: RTÉ/IE