Gay pride parade
CNN reporter mistakenly assumes flag with images of sex toys at London gay pride parade is Isis flag.Twitter

A CNN reporter mistakenly reported spotting an Islamic State (Isis) flag at a gay pride parade in London.

The reporter Lucy Pawle assumed the black and white flag was a banner of the IS militant group when in fact the flag contained images of sex toys.

"This man dressed in black and white was waving what appears to be a very bad mimicry but a very clear attempt to mimic the Isis flag, the black and white flag with the distinctive lettering," said Pawle.

"If you look at the flag closely it's clearly not Arabic, in fact it looks like it could be gobbledygook, but it's very distinctive the Isis flag.

"Anyway I seem to be the only person who has spotted this."

Social media was quick to respond.

Meanwhile, Pawle denied reporting on the IS flag.