Tiger Woods controversially avoided disqualification from the Masters on Saturday when officials used their discretionary powers to impose a two-stroke penalty for taking an illegal drop during Friday's second round.

The world number one, a hot favourite at Augusta National where he is a four-times champion, earned his reprieve following a lengthy review by Masters officials of a penalty drop he took at the par-five 15th.

"I was unaware at that time I had violated any rules. I didn't know I had taken an incorrect drop prior to signing my scorecard," Woods said in a statement. "Subsequently, I met with the Masters Committee Saturday morning and was advised they had reviewed the incident prior to the completion of my round. Their initial determination was that there was no violation, but they had additional concerns based on my post-round interview.

"After discussing the situation with them this morning, I was assessed a two-shot penalty. I understand and accept the penalty and respect the Committees' decision."

Woods suffered a freakish bounce with his third shot at the hole when his approach struck the flagstick before ricocheting backwards off the green and then down the slope into Rae's Creek. Instead of going to the drop area on the far side of the water, he chose to play his fifth shot from the same place as his third, going two yards back before getting up and down from there to salvage a bogey six.

Woods appeared to be in potential trouble for violating Rule 26-1 which requires a player to drop the ball "as nearly as possible at the spot from which the original ball was last played".

After meeting with Woods on Saturday morning, the Masters competition committee determined that the 14-times major champion had violated that rule but would be allowed to remain in the tournament.

"The penalty of disqualification was waived by the committee under Rule 33 as the committee had previously reviewed the information and made its initial determination prior to the finish of the player's round," Fred Ridley, chairman of the competition committee, said on his Twitter account.

Ridley said that an initial review of Woods's drop had been conducted on Friday after officials had been prompted by a television viewer.

"At that moment and based on that evidence, the committee decided he had complied with the rules."

Woods finished the second round at three under par, after shooting a one-under 71, but his score was changed to one-under, following the penalty, leaving him five strokes behind halfway leader Jason Day of Australia.

World number one Woods appeared to incriminate himself with his post-round comments on Friday. "I went back to where I played it from, but I went two yards further back and I tried to take two yards off the shot of what I felt I hit," he said of his drop. "And that should land me short of the flag and not have it either hit the flag or skip over the back. I felt that that was going to be the right decision to take off four right there, and I did. It worked out perfectly."

His fifth shot pitched short before coming to a rest just four feet from the hole, from where he knocked in the putt for bogey.

Woods's reprieve sparked a mixed response from his fellow players. Six-times major champion Nick Faldo told Golf Channel: "Tiger is the judge and jury on this. He said he moved the ball back two yards to gain the right yardage. The rule clearly states he has to drop it as near as possible. Our rules are black and white: That is a breach of the rules. Simple as that.

"He has to sit down quietly and think about this - the mark this will leave on his career, his legacy."

Former world number one David Duval tweeted: "Was there intent to break the rule is the question? I think he should WD. He took a drop to gain an advantage.

"DQ believers aren't wrong. 2 shot penalty believers not wrong. Precedent is now set."

Northern Ireland's 2010 US Open champion Graeme McDowell tweeted: "From Augusta's statement we know that the possible infringement was detected before he finished the round. Should have been dealt with then."

In the wake of the slow play penalty slapped on China's 14-year-old Guan Tianlang during Friday's second round at Augusta National, there will be a widespread perception that Woods has received preferential treatment. Guan, at 14 the youngest competitor ever at the Masters, posted a 75 that included a penalty stroke for slow play that put him at four-over 148. Woods later said of Guan's ill-fortune: "Well, rules are rules."