The Football Association contacted the Championship club on Thursday (AEST) after the club released its kit with an Umbro design featuring the name of the gambling company in a bold sash across the front.
Huddersfield's managing director Sean Jarvis said the 2019-2020 kit, worn in a pre-season friendly against Rochdale this week, was a "really modern twist on how we feature the famous Paddy Power logo".
Eyebrows were raised, however, as the sponsor's logo appeared to exceed the maximum coverage permitted by FA regulations.
The Terriers, however, revealed their actual new kit on Saturday, which has no sponsor logo at all, although Paddy Power remains on board as a commercial partner.
"We're happy to support Paddy Power's 'Save Our Shirt' campaign with the launch of our actual 2019-2020 home kit this morning," Jarvis said.
"It has been a very interesting two days since the original launch on Wednesday, which we expected, but we've always had in mind that our supporters would understand, and really like the real kit when it was properly revealed today.
"We're really happy with this kit, which is unique in modern-day football. I'd like to thank Paddy Power, Umbro and everyone else involved in the kit for their hard work towards today."
Huddersfield was relegated from the Premier League last season and opens its Championship campaign at home to Derby County on 6 August (AEST).