The work, by street artist Lushsux
, showed the first female U.S. Presidential nominee in a plunging American flag-printed swimsuit.
"The image was already a viral meme circulating around social media. I took it and blew it up on a wall in public," Lushsux told CNN Tuesday.
But as word of the provocative piece spread, local authorities in the Australian city of Melbourne threatened to fine and prosecute the owner of the building where it was featured if it wasn't taken down, CNN affiliate Nine News reported.
"We believe it is offensive because of the depiction of a near naked woman, not on the basis of disrespect to Hillary Clinton," Stephen Wall, Maribyrnong City Council CEO told Nine News.
Instagram also temporarily suspended the artist's account where he'd posted the artwork.
That prompted the artist to add something extra to the mural -- he painted some dollar bills stuffed in the swimsuit in protest.
He said: "The dollar bills were in reaction to Instagram deleting my account a day after I posted Hillary. Quite strange timing?"
But with the council threat looming, Lushsux eventually decided to cover it with a burqa -- a traditional garment used by some Muslim women to cover their bodies in public.
"This is no longer a wall of a supposed 'offensive and near naked' Hillary Clinton, it is now a depiction of a beautiful Muslim woman," the artist posted on Instagram.
"No reasonable person would consider this offensive. If you do consider it offensive you are a sexist, racist, Islamophobic, xenophobic, uncultured and ignorant bigot."
He also took aim at "online censorship" in a plea to Instagram co-founder Kevin Systrom. "Censorship of artists on Instagram is out of control @Kevin restore my account @Lushsux."
No stranger to controversy
It's not just Clinton who's been given the Lushsux treatment. He previously painted (and then modified) murals of Donald Trump, and the Republican nominee's wife, Melania across Melbourne.
The artist's take on Melania Trump bears the Clinton slogan: "I'm with her."
Lushsux has also parodied other very famous celebrities. In one mural, a portrait of singer Taylor Swift is captioned "In Loving Memory of Taylor Smith 1989-2016" in a reference to the pop star's public row with Kanye West. The pair were involved in a spat last month
over whether Swift had given the rapper permission for certain lyrics in his song "Famous."
Lushsux was apparently contacted by Swift's legal team.
"Taylor Smith's attorney has emailed me with a threat of legal action if I do not remove my wall relating to her," he said on Instagram.
In the end, he turned that piece into one of Harambe, the gorilla whose killing after a toddler fell into his enclosure sparked outrage.