The ITV breakfast host made the Freudian slip while the GMB crew were messing around with CGI trickery because Reid had opted to wear a green dress – allowing them to project Shephard's face on to her.
Reid explained to viewers: "The trouble is when you work in television, things can be projected on to green."
Shephard continued: "It's called chroma key. Susanna is wrapped in the warmth of a Ben blanket."
Watch: Kate Garraway denies she is leaving 'GMB' to care for husband Derek Draper fulltime
He added: "My nipples are..."
A shocked Reid asked: "What?!"
Shephard looked mortified as he replied: "My nipples?!... Nostrils! They are very easily confused."
Reid retorted: "Did your inner thoughts come out on national television to millions? Nobody's thinking nostrils any more!"
Dr Hilary Jones interjected: "There's some anatomy revision going on this morning... Think it's called a Freudian slip... Can't help you, Ben."
Shephard pleaded: "Help Hils, don't throw me under the bus."
But viewers loved the slip of the tongue, with many saying it had brightened their day first thing in the morning.
One tweeted: "Thank you for that 'nipples' slip... After a few weeks of stressful times at work as a nurse... You have started my day with a huge smile."
Another wrote: "Hahaha Ben Shepherd is hilarious #gmb love a good Freudian slip."
And several began dubbing GMB the 'Carry On Ben' show.
Shephard, 46, is currently joining Reid, 50, as her co-anchor on the show on Mondays to Wednesdays after Piers Morgan quit Good Morning Britain earlier this month over comments he made about Meghan Markle.
Watch: Kate Garraway tells Ben Shephard she's not leaving GMB