Indonesia has been stripped of the right to host this year's Under-20 football World Cup, Fifa said on Wednesday.
The decision to stop Indonesia staging the May 20-June 11 tournament was taken after the country's football federation (PSSI) said it had cancelled the draw because the governor of the largely Hindu island of Bali refused to host Israel's team.
"Fifa has decided, due to the current circumstances, to remove Indonesia as the host of the Fifa U-20 World Cup 2023," a Fifa statement said.
"A new host will be announced as soon as possible, with the dates of the tournament currently remaining unchanged. Potential sanctions against the PSSI may also be decided at a later stage."
World football's ruling body added that the decision had been taken following a meeting between its president Gianni Infantino and PSSI chairman Erick Thohir.
PSSI officials did not immediately respond to requests for comment.
However, in a live interview with KompasTV less than 30 minutes before Fifa's announcement, PSSI executive committee member Arya Sinulingga said he was "very pessimistic" about the World Cup hosting issue.
"If we make political requirements in sports, it'll always be like this. We will be exiled from the football ecosystem," he said. "It's very tough for all of us. We're headed into a calamity in sports.
"We have to separate football or sports and politics."
Protesters marched in the capital Jakarta this month waving Indonesian and Palestinian flags and demanding that Israel was not allowed to participate.
Indonesia's population is predominantly Muslim. Most Indonesian Muslims practise a moderate version of Islam, but there has been a rise in religious conservatism in recent years that has crept into politics.
Earlier this week, the PSSI said losing hosting rights would harm Indonesian football teams' chances of taking part in other Fifa tournaments, while the economic losses would amount to "trillions of rupiah".
Fifa said on Wednesday that it was committed to aiding the PSSI following a deadly stampede last year that led to the deaths of 135 spectators at a stadium in East Java.
"Members of the Fifa team will continue to be present in Indonesia in the coming months and will provide the required assistance to the PSSI, under the leadership of president Thohir," Fifa said in the statement.
"A new meeting between the Fifa President and the PSSI President for further discussions will be scheduled shortly."
As hosts, Indonesia automatically qualified for the Under-20 World Cup, but they have not played in the tournament since 1979.