Controversial payday lender Wonga has said it will pull its adverts from a popular children's smartphone app after being contacted by the Guardian.

The Talking Ginger app features a ginger cat that helps to teach kids how to get ready for bed, but has carried adverts for Wonga as well as those from other inappropriate advertisers such as casinos.

The adverts, which take users to Wonga's app store download page, contain the line: "Cash loans up to £400 … apply now".

Talking Ginger, which has a five-star rating from reviewers on the Apple app store, is part of a series of Talking Friends apps from developer Outfit7, including Talking Tom Cat, which also carries the Wonga adverts, and Talking Lila the Fairy. All the apps are available on iPhone, iPad and Android mobile phones.

App users can only remove the adverts from Talking Ginger if they pay for "virtual toothpaste" – 69p gets a user 100 squirts of toothpaste and no more adverts, while larger sums gets them even more toothpaste.

Wonga, which is in the news for its £24m four-year sponsorship deal with Newcastle United football club that will see its logo emblazoned on the club's shirts next season, offers short-term loans at an annual percentage rate of 4,214%.

It and other high-cost short-term lenders have been accused by Labour MP Stella Creasy of being "legal loan sharks" and are the subject of a campaign to cap interest rates.

Developers regularly offer apps for free, making their money from advertising or from users paying for "in-app purchases" (IAPs) – paid-for perks that often improve a game and can result in adverts being removed. IAPs are particularly controversial in apps aimed at children, not just because many deem them unethical but because they can cost parents money if the purchase itself is not password protected.

When developers create a game they often contract out the advertising that will appear within it to a specialist, which can serve adverts from hundreds of different organisations. This appears to be the case with Wonga's appearance in the Talking Friends series.

Wonga said it had no idea its adverts were appearing within children's apps and said it was instructing its advertising agency to remove them immediately.

A spokeswoman said: "Our ads should absolutely not be appearing in apps designed for children and those under the age of 18. We have alerted our media buying agencies responsible and instructed them to take them down with immediate effect."

At the time of publishing the adverts were still appearing in the apps.