Coventry have been deducted 10 points by the Football League having entered administration.
The Sky Blues were 10th in npower League One, five points off the play-off places, but their promotion hopes for this term have now been extinguished having dropped to 14th place.
Coventry do, however, have one week in which to appeal the decision.
A statement released this afternoon read: "The Football League can confirm that Coventry City Football Club have been deducted 10 points, in accordance with its rules and regulations.
"This sporting sanction has been implemented with immediate effect. Coventry City have 7 days in which to appeal.
"The League has now begun discussions with the administrator aimed at achieving a sustainable future for the club within The Football League."
In response to the penalty, Coventry released a statement stressing they will be discussing a course of action with the Football League as soon as possible.
"Coventry City Football Club can confirm it will be taking up the invitation from the Football League to discuss its decision to deduct 10 points from the club," it read.
"The club is disappointed by the decision but also understands the Football League's course of action in accordance with its rules and regulations. We welcome the offer for further dialogue which we hope to commence at the earliest available opportunity.
"Coventry City Football Club has the right to appeal the decision within seven days and discussions have already started with regards to the club's next official course of action.
"The Football League board will further consider their position regarding the club at their next meeting on April 11 2013."
Coventry and hedge fund owners Sisu found themselves in the High Court in London last Friday battling against an application for administration submitted by Arena Coventry Limited (ACL), who manage the Ricoh Arena and claim to be owed over £1.3million in unpaid rent stretching back 12 months.
That initial hearing was adjourned, just hours after City placed a non-operating subsidiary of the club into administration - insisting it was business as usual as Coventry City Football Club (Holdings), which they claimed holds the crucial 'golden shares' which provide membership to the Football League and FA, operates as normal.
ACL on Tuesday returned to the High Court and asked for their own application for an administration order to be dismissed.
They claimed to have it on good authority from the Football League and the Football Association that Coventry's 'golden shares' do in fact still lie with Coventry City Football Club Ltd, which has already gone into administration, hence the withdrawal of their application.
And the Football League have today sided with ACL when making their official verdict.
It comes on the same day as Coventry finally reached a short-term agreement to play their three remaining home games this season at the Ricoh Arena.
The non-operating subsidiary of the club placed in administration, Coventry City Football Club Limited, held the lease and licence for the stadium.
That covered permission to play home matches at the Ricoh Arena as well as the rental of the club shop and offices, which have already been emptied, with all staff having moved to their Ryton training ground.
It sparked speculation and uncertainty over where City would play their remaining home fixtures this term, starting with tomorrow's visit of league leaders Doncaster, but a short-term solution has now been reached.