Not, strictly speaking, the UK government. The Internet Watch Foundation, a non-governmental organisation, placed the article/image in question on its blacklist, a list which most major UK ISPs use (notable exceptions at the time were the UK universities' and military networks IIRC).

AFAIK, whether or not the image is actually illegal under English law is somewhat unclear (the definition of "indecent" is rather woolly), though it's certainly a poor choice for an album cover.

Edit: "to its blacklist" -> "on"; added "a non-governmental organisation"