Gamaa Islamiya's branch in the province of Minya where the prosecutor ordered the lashing, stopped short of condemning such a punishment, but said Egypt's penal code states that punishment is decided by judges, not prosecutors.
The incident came amid growing fears by some in Egypt that Islamists, emboldened by election wins, are seeking to slowly enshrine a religious system based on conservative interpretations of Islamic law.
President Mohammed Morsi's conservative Muslim Brotherhood group has emerged as the most powerful political force in Egypt since the uprising that ousted longtime autocrat Hosni Mubarak two years ago.
While Gamaa Islamiya, a former militant group, disapproved of a prosecutor meting out punishment instead of a judge, it has long called for the strict application of Shariah, or Islamic law, which prohibits drinking.
"It is essential to purify the law governing punishments from all that contradicts Shariah," the group said.
Gamaa Islamiya waged a bloody insurgency against the government in the 1990s, and its members were ruthlessly rounded up, tortured and imprisoned for years. Some were killed. They later renounced violence and were allowed to form a political party after the country's uprising two years ago that ousted longtime autocrat Hosni Mubarak.
The order late Sunday by prosecutor Hussein Anani led to his suspension in Minya, about 110 miles (180 kilometers) south of Cairo, according to the office of Egypt's prosecutor general. Spokesman Mahmoud el-Hefnawi said the country's top prosecutor also ordered Anani's decision canceled and launched a judicial inquiry.
As in many countries, public intoxication has long been a criminal offense in Egypt. Penalties range from small fines to around three months in prison. But Egypt's penal code does not mention flogging. Years ago police had the right to lash disobedient prisoners, but even that has been banned.
In a copy of the now-overturned decision obtained by The Associated Press, Anani wrote that he had ordered a police officer to carry out punishment in line with Islamic law against Mohammed Eid Hassan for consumption of alcohol. He then cited two verses of the Quran to try to back up the punishment.
One of the verses warns Muslims against drinking alcohol, gambling and idolatry. It states that alcohol is the working of the devil.
None of the verses, however, prescribe lashing as a punishment.
Anani also cited another three verses of the Quran, which state that those who do not carry out God's rule are infidels, unjust and transgressors.
The flogging order was hailed as a triumph on militant forums.
Police refused to carry out the order and instead reported it to their superiors in the Interior Ministry, who then contacted the prosecutor general's office.
The sale and consumption of alcohol in Egypt is legal, and local beer is a common feature of street weddings.
Hassan, the man who escaped the lashing, said he was arrested for public intoxication after attending a friend's wedding in Minya where beer was served.