The row has come close to creating a diplomatic incident between Australia and India. Models wearing colourful swimsuits and bikinis covered in pictures of the goddess took to the catwalk in front of hundreds of people in Sydney last week.
However, not everyone thought it was appropriate to use of the revered goddess's image on a skimpy piece of clothing.
When news of the fashion show reached India, some Hindus were outraged. Over the weekend, demonstrators in Amritsar burned the Australian flag in protest, waving photographs of the offensive swimsuit and demanding that all of the garments be recalled.
"Lakshmi was meant to be worshipped in temples or home shrines and not for pushing swimwear in fashion shows for mercantile greed of an apparel company," he said.
The Bharatiya Janata Partya party (BJP) also called for an apology from the Australian government. The incident is the latest in a long line of fashion faux pas by Western designers when it comes to Indian gods, including US designer Guess using the image of Ganesh on a tank top and the French shoe brand Minelli putting images of Lord Rama on shoes. The Australian fashion house responsible for the design was quick to apologise. In a statement, Lisa Blue Swimwear said the company had put a halt on production of the new range and pulled the pieces that had been shown during Fashion Week.
"This range will never be available for sale in any stockists or retail outlets anywhere in the world," it said.
"We apologise to the Hindu community and take this matter very seriously.
"At no time would we ever have intended that the brand would cause offence."
Australia's relationship with India is only just starting to recover after a spate of attacks on Indian students last year which led to widespread protests and claims that the crimes were racially motivated.