"The Australian Rugby Union (ARU) has today resolved to discontinue the Western Force Super Rugby licence," read a statement released on Friday.
"The decision comes after several weeks of consultation with rugby bodies and stakeholders, including government and commercial partners."
The Force agreed to enter arbitration last week with the ARU, who said in April that they would cut either the Force or the Melbourne Rebels from Super Rugby next season as the competition contracts from 18 to 15 teams.
The Kings and Cheetahs teams in South Africa have already been cut from the competiton
But RugbyWA is almost certain to take the case to the Supreme Court if they win a right of appeal.
Billionaire mining magnate Andrew Forrest has pledged to do everything within his powers to save the Force, and the issue is now set to be battled in the courts.
The ARU said the decision to "discontinue the Force's licence" was based primarily on financial outcomes.
"As we have reinforced throughout this process, there are commercial realities which are linked to declining on-field performance across our Super Rugby teams which has put Australian rugby in a position where it can no longer sustain five teams," ARU chairman Cameron Clyne said.
"Furthermore, the significant unbudgeted support funding that has been provided to Super Rugby teams over the past five years has greatly affected our capacity to invest in community Rugby.
"This is a sad day for rugby, especially for Western Force fans.
"We accept that there will be anger and resentment over this decision and we sympathise with those fans. We sincerely hope that they are not lost to the game forever.
"The decision to exit the Western Force from Super Rugby is not a decision to abandon the game in Western Australia.
"Western Australia will retain an important place in Australian rugby and the ARU will continue to support youth development programs and the community game in the West.
"There will be a clear pathway for young Western Australian rugby players to reach the highest level and represent the Wallabies."
Photo: PhotoSport Richard Hardwick in action for the Western Force in a match against the Sharks earlier this year.