The agency reported that software was used to make the damage inflicted by an Israeli air strike on Beirut look worse than it was in an image that appeared on news websites on Saturday.
Reuters said the photograph was taken and doctored by freelancer Adnan Hajj using Adobe Photoshop software. The practice is sometimes known as 'Photoshopping'.
The picture's accuracy was first questioned in a posting to a blog called Little Green Footballs. A Reuters photographer in Canada read the posting and alerted his editors. Reuters quickly terminated its relationship with Hajj and began investigating all his work. A second doctored image was found: a photo of an Israeli F-16 warplane in action over Lebanon that ran on 2nd August, amended to increase the number of flares dropped by the plane.
On Monday, Reuters posted a statement in its online picture archive saying that, as a precautionary measure, it has withdrawn all photos taken by Hajj. It added: "Reuters has tightened its editing procedure for photographs of the conflict and regrets any inconvenience caused."
"There is no graver breach of Reuters standards for our photographers than the deliberate manipulation of an image," said Global Picture Editor Tom Szlukovenyi. "Reuters has zero tolerance for any doctoring of pictures and constantly reminds its photographers, both staff and freelance, of this strict and unalterable policy."
In 2003, the LA Times sacked a photographer in similar circumstances. Brian Walski was accused of digitally altering an image of a British soldier directing Iraqi civilians to take cover from Iraqi fire on the outskirts of Basra to make it look more dramatic.
The LA Times and Reuters' strict policies against doctoring are reflected in the UK Press Complaints Commission's Code of Practice: "The Press must take care not to publish inaccurate, misleading or distorted information, including pictures," it says.
It adds: "A significant inaccuracy, misleading statement or distortion once recognised must be corrected, promptly and with due prominence, and – where appropriate – an apology published."