United has essentially been an A-Leagues club in name only for more than a year amid varied financial woes, which included not paying players and staff.
The club was placed into hibernation by the Australian Professional Leagues (APL) in September 2025, with A-League Men and Women players having to scramble to continue their careers elsewhere.
Ownership West Melbourne Group avoided a wind-up order from the Australian Tax Office in January by settling a $15.5 million tax debt.
Football Australia declined to reinstate the Tarneit-based club's licence in May and United again won't participate in either the ALM or ALW.
West Melbourne Group have another wind-up hearing in the Federal Court on Tuesday and on Monday the APL officially terminated their participation agreement in the A-League competitions.
"Since the club was placed into conditional hibernation in September 2025, the APL has been in close consultation with Western United as they've worked through financial, governance and legal matters to try and rebuild the club," APL chair Stephen Conroy said in a statement.
"The APL board has since taken the decision to terminate Western United's club participation agreement.
"The club was in breach of a number of its obligations under that agreement, including its obligation to comply with the Football Australia National Club Licensing Regulations.
"It's been a difficult period for everyone connected to Western United - and we want to acknowledge the management, staff, players and especially the fans - who have given so much to the club and will no doubt be hurt by this news."
AAP understands United still owes some of its former players and staff money.
United was granted a licence in 2018, off the back of grand promises to build its own stadium, entered the A-League Men ahead of the 2019-20 season and won the ALM championship in 2021-22.
A women's team followed in 2022-23 and reached the grand final in their first season.
United has consistently been defiant and adamant it will return to the A-Leagues.
When put into hibernation, the club claimed it wasn't a "step back."
After the tax debt was paid in January, the club declared its ambition to seal a "strong return to the A-Leagues".
Despite the latest development, the club on Monday broadcast plans to return in a year's time under new ownership.
"Over recent months, we have worked closely with the APL on a pathway that gives the club the best opportunity to survive, rebuild and return to the A-League under new ownership," United said in a statement on Monday.
"This creates an opportunity for new custodians, new investment and a fresh start.
"The objective must now be to preserve Western United's identity in Melbourne's west and work towards a return to the A-League for the 2027-28 season.
"This should not be the end of Western United. It should be the reset that allows the club to rebuild and return stronger."
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