Coventry was home to Wasps from December 2014 until November 2022
Two-time European champions Wasps will play "at the bottom of the playing pyramid" in England after an offer of a place in the second tier was withdrawn.
The Rugby Football Union (RFU) said the club had not met a deadline to confirm commitments made when a licence was first approved in December.
That approval came on the day the club was bought by new owners - two months after it had gone into administration.
Wasps remain without a ground but have a training base in Henley-in-Arden.
Before going into administration, the six-times English champions had been based in Coventry.
Should they still be considered to be in the Midlands, that would mean they enter either Counties 4 Midlands West (North) or Counties 4 Midlands West (South) - both of which are in the 10th tier.
Wasps' application to return to professional rugby in the 2023-24 Championship was approved by the RFU on 16 December - the same day an application from Worcester was rejected.
The offer made to Wasps was subject to a number of conditions being met.
"These included evidencing payment to rugby creditors and putting in place suitable governance structures including a majority independent board and a process for managing risk," said the RFU.
"The RFU was also concerned about the lack of progress engaging coaching staff and players.
"The club stated that it could not meet these commitments, recommit to participating in the Championship in 2023-24 or engage staff of players until further finance was secured."
Wasps are yet to announce where they intend to play their home matches having previously advised the RFU of two possible tenancies - at Solihull Moors' Damson Park or Sixways, home of Worcester Warriors.
The RFU added in its statement that Wasps had been given "the best chance of continuing in the league structure" and recognised "the effort the new owners have put in to try to make this happen".
"The RFU board decided that in order to give certainty to other clubs, the licence to continue to play is withdrawn," it added.
Wasps, who had until recently been using a long-standing Coventry-based PR agency to handle all media matters, put a two-page statement on their Twitter account.
It referred to them having "embarked on a wide-ranging and professional search for suitable funding".
The club blamed a lack of previous clarity from the RFU about the pathway back to the Premiership, but admitted it did not have the money to compete in the Championship.
