Rugby union chiefs wanted to launch a new cross-hemisphere Nations Championship from 2022, in which the first and second-placed sides of Europe's Six Nations would face off against the two countries at top of an expanded, six-team southern hemisphere Rugby Championship in end of year semi-finals and subsequent final.
The proposals were backed by a record commercial partnership worth nearly £5 billion ($6.6 billion) of investment.
However, controversial idea to introduce promotion and relegation to both championships were met with trepidation from unions who would run a huge financial risk if teams were relegated.
"World Rugby can confirm that it has taken the reluctant decision to discontinue plans for the Nations Championship after the required unanimous
agreement by unions to enter into exclusive negotiations was not achieved by Wednesday's deadline," World Rugby said in a statement.
Alternative arrangements may now be explored in order to help those unions shut out from rugby's two major annual championships, including the possibility of expanding the World Cup from the current format of 20 teams.
In the Southern Hemisphere, nations like Fiji, Japan or even the USA had been floated as potential additions to the Rugby Championship under the Nations Championship proposal
"We remain fully committed to exploring alternative ways to enhance the meaning, value and opportunity of international rugby for the betterment of all unions," said World Rugby chairman Bill Beaumont.
"This includes our continued commitment to competition and investment opportunities for emerging nations to increase the competitiveness of the international game with a view to possible Rugby World Cup expansion in 2027," he added.