With the Super Rugby competition moving from 18 teams to 15 in 2018, Australia was forced to cut one of its franchises.
Of the five Australian clubs, the ARU announced earlier this year either the Melbourne Rebels or the Western Force were set to be axed.
The ARU confirmed on Friday afternoon, the Western Force will lose its Super Rugby licence.
“The ARU Board has today made the decision to discontinue the Western Force as the Super Rugby competition reverts to fifteen teams for the 2018 season,” ARU Chairman, Cameron Clyne said in a statement.
“This has been a complex process to reduce Australia’s Super Rugby representation to four teams as agreed by SANZAAR following its review of the competition.
“We are regretful that this issue has consumed so much of the public commentary on the game in 2017. It was clearly not our intention for this to play out over such a lengthy period however there have been factors outside the ARU’s control that have prevented us from completing the process.
“Our decision to exit the Western Force has been guided primarily by 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.
“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.
“Our immediate concern is to support the individuals at the Western Force through these difficult circumstances and we will deploy various ARU management staff to Western Australia to provide assistance to all players and staff.”