The Bill sets out strict rules to combat ambush marketing through the use of Games-related words and images by unofficial sponsors.
The Institute of Practitioners in Advertising says that will prevent most companies benefiting at all from 2012.
"This is an unreasonable bill and revisions are required," IPA legal director Marina Palomba told BBC Sport.
London's organising team insists the legislation is necessary to safeguard the investment of official sponsors.
"There is absolutely no intention of stopping London businesses from becoming involved in the Games, quite the reverse," said a London 2012 spokesman.
Breaches of the proposed legislation are punishable by fines of up to £20,000, or unlimited fines in more serious cases.
