The arrest of a teenager on suspicion of posting a picture of a burning poppy on Facebook has triggered fresh allegations of over-zealous policing of the internet.

The 19-year-old was detained on Remembrance Sunday in Canterbury, Kent, after the posting of the image of a poppy being torched by a lighter was reported.

Kent police confirmed that a youth was in custody and being questioned under the Malicious Communications Act 1988. The act makes it a crime to send anything "indecent or grossly offensive, or which conveys a threat … [where] there is an intent to cause distress or anxiety to the recipient". It is usually used against poison pen letters.

The Crown Prosecution Service is drawing up draft guidelines on when to prosecute those who misuse social media websites.

Kent police said officers had been alerted at 4pm on Sunday to the image, which was accompanied by an offensive message, reported to be: "How about that you squadey c****."

Civil liberties groups criticised the arrest as a restriction on freedom of expression. The campaign group Big Brother Watch called on the police to drop their investigation. Nick Pickles, the director, said: "Kent police need to urgently release this man and drop an utterly ridiculous investigation into something that has harmed no one.

"It is not illegal to offend people and, however idiotic or insensitive the picture may have been, it is certainly not worthy of arrest. The case highlights the urgent need to reform a law that poses a serious risk to freedom of speech after several ludicrous prosecutions in recent months."

On Twitter, there was widespread condemnation. Thom Lumley, tweeting as Hotstepperrr, wrote: "Dear idiots at Kent police, burning a poppy may be obnoxious, but it is not a criminal offence."

There have been prosecutions for similar offences. In March 2011, Emdadur Choudhury, a member of Muslims Against Crusades, was fined £50 at Belmarsh magistrates court for the "calculated and deliberate" insult to the dead of burning two replica poppies during the two-minute silence commemorating Armistice Day, 11 November. Choudhury had denied a public order offence of burning the poppies in a way likely to cause "harassment, harm or distress" to witnesses.

The Royal British Legion declined to comment on the investigation in Kent.

In September, the CPS gave a detailed explanation of why a semi-professional footballer who tweeted offensive messages about the Olympic diver Tom Daley was not prosecuted.

The CPS pointed out in that case the message, "however misguided" was supposed to be humorous and that Daley and his teammates were not the intended recipients.

In Bristol, a man who skateboarded alongside a Remembrance Sunday parade wearing a pink outfit and horned mask has been charged under the Public Order Act, police said. Jose Paulo Da Silveria, 38, is alleged to have skateboarded beside troops as they marched past the cenotaph towards College Green. He was arrested at the scene and will appear at Bristol magistrates court on 4 December.