The episode of the 70s sitcom – co-written by and starring John Cleese – sees English hotel owner Basil Fawlty struggle in his efforts not to offend some German guests, before a bump on the head results in him performing a Nazi goose-step front of them.
The original cut of the episode also featured hotel resident The Major using racist terms to describe cricket teams from the West Indies and India – but this has been edited out.
Fawlty Towers trended on Twitter when the edited episode was shown on BBC One on 25 April, with viewers divided in their reaction to the cut.
Some felt the editing had been selective, because it removed The Major's use of racist terms but kept the scenes in which Basil uses offensive language towards the German guests.
Others objected to the editing as they claimed the terms' use showed that historically they were once considered acceptable in British culture.
And while some celebrated the fact that the episode had been aired as a victory for freedom of speech and "Britishness", others mocked them for missing the point as the episode was written to highlight xenophobia.
Cleese has said previously: "Everybody thinks that was a joke about the Germans, but they missed it. It was a joke about British attitudes to the war and the fact that some people were still hanging on to that rubbish."
Last year UKTV announced it had taken down the episode, with plans to reintroduce it with an "offensive content and language" warning.
Cleese responded by saying: "If you put nonsense words into the mouth of someone you want to make fun of you’re not broadcasting their views, you’re making fun of them.
“The Major was an old fossil left over from decades before. We were not supporting his views, we were making fun of them. If they can’t see that, if people are too stupid to see that, what can one say?”
The edit shown by the BBC was in fact made in 2013.
A BBC spokesperson said: "We are adhering to Ofcom’s language guidance and the BBC’s Editorial Guidelines and broadcasting the same, pre-watershed compliant version of the show which we broadcast in 2013."
The episode is currently shown unedited on Netflix.
Watch: John Cleese on why he left the UK