Lobby group Family First complained to the authority after the comment was aired in a 3 News item at 6pm on March 6.
The report on the Government's asset sales plan included a comment from Prime Minister John Key, who said share prices from asset sales would be set a level that was "affordable for a lot of New Zealanders".
The item featured comment from opposition MPs, including Mana Party leader Hone Harawira, whose blunt response to Mr Key's comment was: "Bulls--t."
Family First complained that the inclusion of the comment was unnecessary and offensive. It said the comment breached the standard of good taste and decency, and the standard of children's interests.
The group argued the inclusion of the comment normalised the language and was "a particularly bad example when it's said by a political leader".
TV3 responded that it was unnecessary to obscure the language, given its low level of offensiveness and the public interest in hearing a politician express his views.
In its determination, released today, the BSA said it had to take into account the context of the broadcast - including "audience expectations of the language used by Hone Harawira".
It noted Mr Harawira had used the word "bulls--t" to convey his opposition to a major Government policy that was the subject of much controversy.
"In this respect, the comment provided viewers with information about a political response to the issue, as well as insight into the characteristics of a political figure in terms of the way he chose to express himself.
"We consider that this was of high value in terms of the right to freedom of expression, and we should be cautious about interfering with its broadcast and its reception."
The BSA found the use of one swear word during a unclassified news programme targeted at adults would not normalise such language, especially among children who were unlikely to be watching unsupervised.
The authority noted its own research that found only 12 per cent of people considered the word "bulls--t" to be totally unacceptable in all broadcast scenarios.
It declined to uphold the complaint, noting the use of the word "bulls--t" would not have offended or distressed most viewers.
Family First national director Bob McCoskrie responded that the "B.S. Authority" finding confirmed the 8.30pm watershed for family-friendly viewing was a "crock".
"Parents are sick and tired of lunging for the remote to protect children from offensive and inappropriate content during family viewing hours - including promos for upcoming adult-rated programmes and sleazy stories on news and current event programmes. This decision continues the trend of flawed decisions."
Mr McCoskrie said the ruling removed a level of respect previously afforded to political leaders.
He said schools should be wary of recommending television news to students because of "the increasing level of offensive and sexual content disguised as news".
