Kidscape director Michele Elliot said there was no reason why a responsible adult should put "graphic details of teenagers having sex on the Web."
Townshend was listed on the sex offender's registry following a warning about child pornography three years ago, the BBC reported.
Townshend was arrested in 2003 during Operation Ore, which investigated Web sites that featured child pornography.
Tink Palmer of children's charity Stop It Now! said it had been unwise to post the story since many people look up to Townshend and admire his music.
Townshend's posted an apology for the tale, titled, "The Comedian," and to "those of you who were beginning to enjoy it."