Solomon was removed from the shortlist of a bingo chain's 'Celebrity Mum of the Year' campaign and later said that she was "embarrassed and ashamed" by her actions.
Iceland's executive director Nick Canning told Retail Week: "Stacey has proved to be very popular with our customers over the last 18 months.
"We understand she deeply regrets the embarrassment she has caused with her recent actions but we are also aware that she has significantly reduced the number of cigarettes she smokes."
He added: "Stacey tells us she is seeking medical advice to help her stop smoking and we remain fully supportive of her during this present time and going forward."
Iceland previously sacked Kerry Katona from its adverts in 2009 after the Atomic Kitten singer was pictured taking cocaine, leading to the hiring of Solomon.
Watch Stacey Solomon in Iceland's Christmas 2011 showcase advert below: