Sale Harriers have competed in the European women's club event for the past 13 years, but their committee decided to pull out of the race in Maia in three weeks' time after canvassing members, coaches and officials.
Modahl tested positive at a track meeting in Lisbon and her sample was analysed at an International Olympic Committee laboratory there.
Last month, two testers from the laboratory failed to appear to give evidence to the British Athletic Federation disciplinary hearing which found her guilty.
Eric Hughes, Sale's women's team manager, said: "Breaking such a record was a hard decision and one that hurts me. But we felt it absolutely necessary to make the sacrifice and show we are standing by Diane.
"Portugal is the source of the whole issue, so how could we accept the sponsorship and hospitality of a country which has so many questions to answer?"
- More about:
- British Cycling Federation
- Foreign & Commonwealth Office
- International Olympic Committee - IOC
- Track & Field