Cardiff City, Swansea City, Wrexham, and Newport County had been working with the Football Association of Wales on plans to enter a revamped Welsh League Cup.
The hope was that the winners would qualify for the Europa Conference League.
However, after concerns were raised by the EFL and some of its member clubs, the FA board ruled against the plans.
The FA cited concerns regarding competition integrity, fixture congestion, player welfare, and the impact on existing competitions.
In response, the FAW expressed disappointment, stating that the new competition would have been "game-changing" for Welsh football.
