England's Guinness Premiership clubs will not take part in the Heineken Cup and European Challenge Cup competitions next season.
Premier Rugby's decision follows a mass French boycott of both tournaments, which was confirmed at a meeting of Ligue Nationale de Rugby in Paris today.
The powerful Anglo-French alliance has almost certainly sounded the death knell for European club rugby's most coveted prize next term.
Premier Rugby issued a statement after discussions with LNR.
It read: "The current agreement for the European Rugby Cup (ERC), which has been in place for the last eight years, comes to an end after this season.
"This agreement did not include any shareholding for the tournaments' participants - the clubs.
"Negotiations on a new agreement have now been taking place for over 12 months, during which such club shareholdings were a fundamental principle.
"ERC is Europe's foremost international club tournament and all clubs have contributed substantially, alongside the Unions, to its sporting and commercial success over the last eight years.
"It is appropriate that they should become equal partners with the Unions in any future agreement.
"LNR and PRL both believe a position was clearly reached last year which confirmed that clubs would have a much greater say in any minimum seven-year agreement, and that they would both hold shares in the new ERC.
"The clubs remain by this position reached in October 2006 as the basis for any future agreement.
"Regrettably, while the Federation Francaise de Rugby (FFR) and the Federazione Italiana Rugby (FIR) have confirmed this position, the Rugby Football Union (RFU) appears no longer to accept this.
"As a result, LNR and PRL clubs are not willing to participate in the absence of a new agreement based on last year's position, and which is inclusive of all parties."
The RFU made a rapid response to Premier Rugby's announcement, claiming the English clubs were "in clear breach" of the Long Form Agreement - an agreement between the elite clubs and Twickenham — which still has two years to run.
RFU management board chairman Martyn Thomas said: "The decision taken by PRL is a deeply regrettable one, not least because it is a clear breach of a key term of the LFA.
"The RFU have been open to discussions on the Heineken Cup, but only in the context of securing a new overall, long-term deal on all elite player issues.
"We will be pursuing 'The Way Forward' process and consulting with all the relevant parties to secure such a deal. We would also welcome resuming parallel discussions with the clubs.
"Our legal advice on PRL's withdrawal from the Heineken Cup is clear, namely that they are in breach of the LFA.
"The RFU will consider carefully over the next few days what action, if any, we should take in the light of the best interests of the game and what value there would be in forcing the clubs to play in a tournament against their wishes.
"We are also concerned at the effect the English and French clubs' actions will have on the other shareholder unions in ERC who will also suffer significant financial losses.
"We will be calling a meeting of these Unions shortly to discuss ways in which European rugby can be supported.
"We have seen reports that the English clubs, who have withdrawn from the Heineken Cup, may attempt to set up alternative fixtures at home or abroad.
"If they did so in contravention of RFU and International Rugby Board regulations, the RFU would take this matter very seriously."
The Anglo-French boycott will be a hammer-blow not only to ERC, who are likely to lose broadcasters and sponsors as a result of the French action, but also competing Celtic teams, who face a potential cash crisis as a result.
It had been hoped that French Rugby Federation president Bernard Lapasset could have swayed the clubs into a rethink, but that has not happened.
French and English clubs have won nine out of the 11 Heineken Cup finals between them. The only exceptions were Ulster (1999) and Munster (2006).
LNR president Serge Blanco said: "There we have it. Our position is that we are not competing next season in the European Cups organised by the ERC.
"This decision is non-reversible. President Lapasset has done all he can to keep the French clubs in Europe. He came to us and proposed a certain shareholding for the clubs.
"We don't have the desire to quit, but moreover, we don't want to suffer. The French clubs have made their choice, and we (LNR) will assume this.
"The English have their own position. We thought we could find an agreement. Unfortunately, that isn't the case, which has led us to make the first move and accelerate the movement because we have to prepare for next season.
"In 2005, we sent a letter to ERC president Jean-Pierre Lux demanding a meeting where we could speak about the future organisation of the European Cup, and in particular, the shareholding.
"But today, there is a stumbling block, not for the shareholding of the French clubs - president Lapasset was in agreement on that - the problem is that the RFU refuse to let go of their percentage to the clubs.
"We will organise nothing at all next season. Today isn't about finding another competition.
"Our only desire was to find a common ground which would allow the clubs to exist together for a longer time. We are sad we haven't found this.
"We love the European Cup as much as anyone else. The French clubs have invested a lot in this competition, but we cannot continue to be walked all over. Either respect us, or don't respect us.
"The only way to respect us is to give us our shareholding."