Just three years after their first A-League Men championship, United have been in financial turmoil for months, with players and staff paid late in April, May and June while superannuation payments were also delayed.
United, based in Tarneit, in Melbourne's western suburbs, have also been unable to register players due to a FIFA ban related to an ongoing dispute with former striker Aleksandar Prijovic.
That ban meant new signing Jaiden Kucharski and captain Ben Garuccio could not be registered in time to play in United's Australia Cup round of 32 loss to Sydney FC.
The club, led by chairman Jason Sourasis, had hoped their issues would be solved by a planned takeover by American group KAM Sports, which was announced in May - but that is yet to be completed.
It meant the club's current ownership were unable to satisfy the financial criteria required to maintain their licence, and they now have seven days to appeal the decision.
Football Australia's First Instance Board (FIB), an independent body responsible for club licensing, met on Thursday.
A Football Australia (FA) spokesperson said the FIB had: "determined that Western United FC has failed to meet the criteria required to be granted an A-League license.
"As such Western United FC's license has been withdrawn, effective immediately.
"Western United FC can appeal this decision to the Appeals Body established under the regulations on certain grounds outlined in the regulations.
"This outcome, while regrettable, reflects Football Australia's ongoing commitment to upholding the integrity, stability, and fairness of competitions for all clubs, players, and stakeholders."
Championship-winning coach and Socceroos great John Aloisi signed a new two-year deal in July, while it is also unclear what the decision means for players, who are receiving support from the players' union, Professional Footballers (the PFA).
United's men's players are in pre-season while it is the off-season for ALW players.
"The PFA was advised by both Football Australia and APL of the FIB's decision to withdraw Western United's A-League licence," a PFA spokesperson said in a statement."We have communicated directly with all players affected by this decision and will continue to do so as this matter progresses."
United have experienced a turbulent existence since they were granted an expansion licence in 2018 - beating several other bids - and entered the league ahead of the 2019-20 season.
Their bid was successful largely based on Western Melbourne Group's commitment to build a purpose-built stadium in Tarneit.
That project was delayed by several years, with the club playing games in Geelong, Ballarat, Footscray and Tasmania, before a far smaller training ground, Ironbark Fields, was constructed.
Despite the setbacks, Aloisi was able to lead the club to their first ALM championship in 2021-22 while the ALW team reached the grand final in their inaugural season the following year.
"We've been advised by Football Australia on the determination by FIB to withdraw Western United's conditional licence," APL executive chairman Stephen Conroy said in a statement.
"This is an FA, AFC and regulatory process, and we won't comment further until the regulatory process and any appeal has been completed."
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