There are those who lead and those who follow, and the Egyptian newspaper Al-Ahram clearly feels that President Hosni Mubarak fits into the former category.

When he was pictured with the Israeli and Palestinian leaders, Binyamin Netanyahu and Mahmoud Abbas, trailing behind Barack Obama on the red carpet at the White House recently, it was nothing Photoshop could not fix. So, on Tuesday, the state-run daily Al-Ahram published the photo, taken at the launch of the latest Middle East peace talks – but with Mubarak switched to the front of the procession.

The original photograph of the five leaders. Photograph: Alex Wong/Getty Images

The doctored picture was exposed by the Egyptian blogger Wael Khalil and quickly struck a chord with Egypt's vibrant network of online opposition activists. Spoof versions have since appeared depicting the 82-year-old Mubarak landing on the moon, breaking the 100m world record and hoisting aloft the World Cup.

The controversy comes as the government gears up for parliamentary elections and amid rumours the authoritarian leader, who has ruled Egypt for nearly three decades, is seriously ill.

"I think what's significant is that Al-Ahram, the regime's mouthpiece, is clearly very sensitive about the way Mubarak appears to the general public in the current climate," Khalil said. "People have picked up on the photo because it's such a good insight into the way the government operates in Egypt; whenever there are problems or failings they simply try and gloss over them – you can see that in this photo, and you can see it in the way they run the country."

Al-Ahram is the most widely circulated Arabic newspaper in the Middle East and is known for its largely fawning coverage of the Egyptian government.

Its market share has been challenged in recent years by an increasingly bold crop of independent newspapers willing to adopt a more critical tone towards the ruling NDP party, a stance which has landed many independent editors in court.

By contrast Al-Ahram and other state-run publications have a track record of subtly "improving" pictures of Egypt's political elite, although usually in a less obvious manner than this week's example.

The scandal will come as a blow to Al-Ahram's director, Abdel Moneim Said, a former Egyptian senator who was thought to have presided over a slight revival of the 135-year-old newspaper's fortunes since taking the helm last year, following decades of mismanagement. Al-Ahram has so far failed to issue any response or apology for its actions, although the offending photo has been removed from the paper's website.

Although the incident has caused plenty of mirth at the president's expense, some are not amused. The anti-government 6 April Youth Movement said: "This is what the corrupt regime's media has been reduced to." It added that the newspaper had "crossed the line from being balanced and honest," and accused it of unprofessionalism.

The publication of the photograph coincided with the arrival of Abbas and Netanyahu at the Egyptian resort of Sharm El-Sheikh for the second round of talks under the current peace process.