A photograph on the Scottish Government's Homecoming Scotland website of the British flag flying at Edinburgh Castle was reportedly changed to show a Saltire in its place.
Royal British Legion Scotland described the move as an "insult" to Scottish war heroes.
Spokesman Neil Griffiths said: "We take the strongest exception to this. It is absolutely wrong.
"This is extremely offensive to the thousands of men and women who have served under the Union Flag."
Mr Griffiths also accused the SNP of using taxpayer's money to promote its own political agenda on the publicly-funded website.
A Scottish Government spokesman confirmed the image had been digitally altered.
He said: "The image is merely a VisitScotland montage used to promote Homecoming 2009, adding fireworks and a Saltire to the castle since the Saltire is the badge of Homecoming.
"These are just promotional images – not adverts for the castle – and they have no political or any other significance whatsoever."
A Labour spokesman described the act as "petty".
The offending image appears to have since been removed.