Northampton chairman David Cardoza admitted the new club were unlikely to be competitive and apologised for the decision.
"We didn't want to launch something that had no chance of success and was not going to be competitive," he said.
"It was always of paramount importance to us that the rugby league side didn't impact on the football club and we were concerned there was an increasing risk of that happening.
"We spoke to the RFL who have been a big help to us and so with regret we have agreed to withdraw.
"I am proud of the work we did to get the Rebels this far and am truly sorry that we have had to end the adventure here."
The RFL insist that Hemel Stags and University of Gloucestershire All Golds, two of the other new planned entrants, will participate in a 10-team Championship One competition in 2013 and say the identity of the other two successful applicants will be announced in due course.
RFL chief operating Officer Ralph Rimmer said: "It had become increasingly clear in recent weeks that Northampton were not where they needed or wanted to be. We have been working closely with Northampton Rebels over the last few months but the club expressed concerns about their ability to prepare for their entry into Championship One.
"Whilst it is clearly a very disappointing development, our decision provides verification that the rigorous checks we have in place are working and that there is a quality threshold being applied.
"It was never going to be an easy process for a new club to gear up to meet the challenges of a semi-professional competition and we have always had contingencies in place for an eventuality such as this."