The move comes following weeks of wrangling between FFA chairman Frank Lowy and Gold Coast's billionaire owner Clive Palmer over how the game is run in Australia.
Gold Coast were issued with the termination notice for making "at least three clear breaches" of their Club Participation Agreement in the past few days.
Key to the shock announcement was the club's decision to emblazon the slogan 'Freedom of Speech' on their shirts in Saturday's match against Melbourne Victory.
As well as the slogan on the shirts, it was also seen around the ground on various billboards, despite the fact the club, who sit bottom of the A-League, were expressly told in the hours leading up to the game not to don the strips or post the signage.
Before the hastily-convened media announcement got under way, Palmer revealed the news on Twitter and stated his desire to fight the decision.
"Our licence is being revoked by Frank Lowy and FFA cohorts ... I will issue detailed response shortly," Palmer said.
"We intend to fight this ludicrous decision."
In his statement, which he delivered alongside FFA chief executive Ben Buckley, Lowy stated that he had no alternative other than to terminate the club's licence.
"The material breach on Saturday night was followed by a statement from the club that it intended to continue using the slogan," said Lowy.
"This behaviour came on top of public comments that displayed a total lack of respect for football and the millions of Australians who love the game."
Lowy insisted that FFA had not acted hastily in coming to the decision, the board having reached it after being given "rock-solid" legal advice that doing so is within their powers.
The FFA hope to come to an agreement with Gold Coast's players that will allow the team to fulfil their final four games of the season, and will pay the players if they agree to do so.
A-League chief Lyall Gorman will head to the Gold Coast along with other FFA staff to brief the players and attempt to broker the agreement to see out the season.
But at best Gold Coast will play four more games before departing the competition a year after fellow expansion club North Queensland Fury bowed out because FFA refused to continue supporting them financially.
While Lowy would not rule out having a club on the Gold Coast in future and said he remains hopeful of still fielding 10 teams in the A-League in the 2012/13 season, it would seem more likely that any replacement for the club would be based elsewhere.
Lowy said that he hopes to install a second Sydney team in the city's west, and the latest development could hasten the establishment of a club in the booming region.