The U2 singer was ordered to cease his unofficial fundraiser by a police officer who failed to recognise him, the Daily Star reports.
"Bono has done his festive busking for 20 years to raise money for the homeless, so he was surprised when the police tried to stop him," a source commented.
"Although he always dresses down for the tradition, it was strange the police failed to spot one of the nation's most iconic men. Bono found the funny side though and the issue was soon resolved."
An advert made by Bono's One Foundation was banned from UK TV in October for breaching guidelines on political content.
It was claimed the same month that U2 are "quite likely" to release a new album in 2012.
Watch U2 in the video for 'Vertigo' below: