The British Olympic Association was declared "non-compliant" to the World Anti-Doping Agency's global code Sunday.
The decision, which was voted on at WADA's foundation board meeting, came at the end of a week in which WADA and the BOA exchanged sharp barbs in an unusual public spat between two major sports organizations.
"I'm very disappointed that it's come to this," WADA president John Fahey said after the ruling was announced.
At the heart of the dispute is a BOA bylaw, enacted in 1992, that bars British athletes for life from the Olympics if they are found guilty of doping.
Britain, which will host next year's London Olympics, is the only country that currently has such a rule.
The bylaw is being tested after the Court of Arbitration for Sport nullified the International Olympic Committee's rule that would ban any athletes who received a doping suspension of more than six months from competing in the next Games.
The court ruled that the IOC provision amounted to a second sanction and did not conform with the World Anti-Doping Code, which sets out rules and sanctions for all sports and countries.
The BOA's lifetime ban, like the IOC's regulation, can be considered a second sanction.
After the IOC's rule was nullified by CAS, WADA notified the British that their ban was in danger of being overturned.
"I believe that WADA has acted very properly from the moment that we got news of the Court of Arbitration for Sport decision," said Fahey. "We asked them (the BOA) to consider their decision."
Earlier this week, BOA chairman Colin Moynihan criticized WADA in a speech in Lausanne, Switzerland. He claimed that the policing body failed to catch the world's worst drug cheats and that WADA is dragging the anti-doping fight into a "dark age."
Former WADA president Dick Pound, a current member of the foundation board, was critical of Moynihan, who also called for an independent review of WADA's activities.
"I must say that I found the comments made publicly by the chairman of the British Olympic Association both very unfortunate and, frankly, quite offensive," Pound said in comments he made to the board prior to the vote. "I think he should at least have verified the factual basis on which he was making allegations against WADA."
Fahey, who succeeded Pound in 2008, was still angry on Sunday about Moynihan's speech.
"We had their decision conveyed to us through a vitriolic spray in a speech that was circulated to everyone except us earlier this week," said Fahey. "(It was) subsequently formally conveyed in a letter (on Friday)."
Exclusion from the Olympics would be the ultimate sanction for any country failing to comply, though that would be unlikely at this stage.
"The British Olympic Association has the right to appeal today's decision by the foundation board to the Court of Arbitration for Sport," Fahey said. "That's a matter for the BOA. We can only send our report. Anyone who is aggrieved or feels that any decision taken by the WADA board is not right has a right of appeal to the Court of Arbitration for Sport so that is open to them if they should choose.
"There are many who are non-compliant. We will try and help each one of them to become compliant, sooner rather than later. That report goes to our stakeholders, they then decide what they want to do, not WADA."
If Britain's lifetime ban is overturned by CAS, several elite athletes will be allowed to compete at the 2012 Olympics.
Sprinter Dwain Chambers and cyclist David Millar, both of whom have served two-year suspensions for taking performance-enhancing drugs, are among the banned British athletes who may become eligible to compete at home in London.
CAS's nullification of the IOC's sanctions has already cleared the way for American LaShawn Merritt to defend his 400-metre title in London.
Merritt, who completed a 21-month doping suspension in July, had previously been ineligible for the games under the IOC rule.
Although the United Kingdom finds itself in this embarrassing position months before it hosts the Olympics, other non-compliant countries, such as Yemen and Libya, are challenged by civil unrest and political instability.
"It's hardly a priority to deal with drugs when you have the problems that you know about in those sorts of countries," Fahey said. "My recollection is around 150 countries are compliant and I am happy to give you that figure because in (Moynihan's) speech the other day, with many of its wild statements, the suggestion was that it was about one-third of that."
Fahey declined to comment on Alberto Contador's CAS hearing set to begin Monday in Lausanne regarding the three-time Tour de France champion's positive test for clenbuterol during his 2010 Tour victory.
Contador's large, and expensive, legal team will argue that he should be exonerated because he was not at fault for eating meat that was either illegally fattened up with the banned drug in his native Spain or imported already containing it.
"It is likely it will not be an immediate decision but rather a reserved decision but the sooner any case is heard, as far as I'm concerned, the better," Fahey said.
He also dismissed recent comments by Yannick Noah. The French tennis great accused Spanish athletes of widespread doping.
Noah, the 1983 French Open champion and father of Chicago Bulls star Joakim Noah, suggested in a published interview that his countrymen no longer had a chance against Spanish athletes and the only way to level the playing field would be to allow everyone to use banned drugs.
"Everybody's got a right to their own view," Fahey said. "I regard that view as both nonsense and rubbish."