The Business, Innovation and Skills Committee recommended pulling the plug on such promotion after hearing fears that the next generation was being "groomed" towards such borrowing.
It was shown evidence that the average child aged between four and 15 was exposed to 70 payday loan adverts last year and was being persuaded that using such credit was "fun" and "easy".
In its response to the report, the Government said the problem was "relatively small" and the advertising watchdog already applied "strict" rules.
"The increase reported by Ofcom in the number of payday lending ads seen by children is concerning," it said.
"But it is also important to note that they comprise a relatively small 0.6% of TV ads seen by children.
"The Broadcast Committee of Advertising Practice, the body that writes the Broadcast Advertising Code, is considering the extent to which payday loan advertising features on children's TV and whether there are any implications for the ASA's (Advertising Standard Authority) regulation of this sector."
It said the ASA "will not hesitate to ban irresponsible adverts."
The regulator is planning a range of curbs to toughen up on the sector when around 200 payday lenders come under its remit next month.