The public service broadcaster engaged in a "significant breach" of broadcasting rules by failing to disclose that the presenter of a documentary about the Gaza situation was the offspring of a Hamas official, according to regulatory body Ofcom.
An inquiry by the media regulator into the programme Gaza: How to Survive a Warzone has found that the documentary was "substantially inaccurate".
The BBC's director general had previously apologised, saying there had been "a significant failing in relation to accuracy".
The regulator has directed the broadcaster to air a prime-time declaration about its decisions.
"Given this constitutes a major infringement of our regulations, we are directing the BBC to air a announcement of our findings against it on the BBC's second channel at 21:00, with a timing to be determined," the statement read.
'Potential to Damage Credibility'
The watchdog's announcement stated: "The inquiry we conducted found that the programme's failure to disclose that the narrator's male guardian served in a position in the Hamas-run authority was substantially inaccurate.
"This implied that the public did not have vital facts which may have been highly relevant to their evaluation of the presenter and the information he shared.
"Trust is at the heart of the bond between a broadcaster and its public, especially for a national broadcasting corporation such as the British Broadcasting Corporation.
"This oversight had the possibility to undermine the very considerable levels of credibility that the public would have invested in a factual film from the broadcaster about the Gaza conflict."
The programme was pulled from the online platform in February after the boy's family links were revealed, and in this past July an corporation's own inquiry found it violated the broadcaster's editorial guidelines on truthfulness.
A BBC spokesperson said: "The regulator's decision is in line with the results of Peter Johnston's review, that there was a serious error in the programme in relation to the BBC's Editorial Guidelines on truthfulness, which reflects clause 2.2 of the regulator's media standards.
"We issued an apology for this and we agree with the authority's determination in its entirety. We will comply with the penalty as soon as the schedule and wording are finalised."
