The channel must pay a penalty of £150,000 imposed by the Independent Television Commission over the programme Too Much Too Young: Chickens screened two years ago.

The scens in the programme that caused concern were those where rent boys set up meetings with their clients.

The 'clients' were later identified as members of the documentary's production team Basement Productions. Allegations of the faking were first made on Radio 5 Live's Parris On TV programme last November.

Channel 4 has argued that it did not know the scenes were not real and would have been happy to label them as "reconstructions".

It is the first time the channel has been fined by the ITC and chief executive Michael Jackson has said he is disappointed with the ruling.

'Clear failings'

In a statement the Commission said the documentary fell foul of a provision in the programme code "which requires that dramatised reconstructions in factual programmes must be labelled as such".

It continued: "The Commission was concerned that there were clear failings in the commissioning process and supervision of this programme.

"When deciding on an appropriate sanction for what were serious breaches of the code, the Commission took into account that Channel 4 had responded firmly and appropriately when the full scale of the problem became known, including drawing up new rules of practice and guidelines for factual programmes and instituting further training for staff.

"The rent boys were genuine and most of the film involved their reflections on life. The breaches and the extent of deception of viewers were therefore not comparable with those in The Connection."

The penalty is only a fraction of the £2m fine imposed by the ITC on Carlton Communications' The Connection, a faked documentary about Colombian drug cartels.

Channel 4 'disappointed'

Channel 4 chief executive Michael Jackson said he felt "extreme disappointment" over the fine.

"We deeply regret the that the ITC has formed the view that Channel 4's actions in relation to Chickens merit a financial penalty.

"The implication is we failed in our duty to our audience, but Channel 4 is certain it did everything in its power, editorially and legally to ensure the authenticity of this programme.

The ITC decision comes amid growing concern over the truth of what is shown on television.