The Women’s Championship will operate with 11 teams rather than 12 next season after the Football Association confirmed Reading’s withdrawal from the second tier.

The club said on Sunday, as reported exclusively by the Guardian on Friday, that they have applied for a spot in the fifth tier of the English women’s pyramid. It follows months of financial uncertainty and the collapse of an 11th-hour takeover bid that had attempted to save the women’s team over the past week. Staff, players and fans are said to be devastated by the news.

Regulations for the women’s pyramid state that any club which withdraws from a league can only re-enter at least two tiers lower, and it’s understood the next available vacancy was in the Southern Region Football League Premier Division, in tier five. That represents a rapid demise for a club that was playing in the Women’s Super League a little over 13 months ago as a full-time team, and which finished in the top half of the WSL four years ago.

The news leaves the Championship one-team short for the upcoming campaign, which is due to start on 7 September, and it is understood league officials did consider adding a 12th club but ultimately it was deemed to be simply too late in the summer for any new team to meet the required licence commitments and therefore a different team joining the second tier was not deemed viable, with fixture lists needing to be drawn up as a matter of urgency and teams already on the verge of starting pre-season.

The FA has said that their intention is for the division to move back to having 12 teams by 2025-26, and therefore only one team will be relegated to third tier next season, rather than two.

In a statement, the FA and the Women’s Professional Game confirmed that Reading had informed them that “they would not be able to meet the ongoing compliance requirements needed to continue” in the Championship, adding : “[We] have been working closely with Reading FC Women all season to support the club and give them every opportunity to continue to compete in the Barclays Women’s Championship next season.

“However, following the club’s decision to withdraw from the Barclays Women’s Championship, the Women’s Football Board has subsequently accepted the club’s application to re-enter the Women’s Football Pyramid, and they will do so in the Southern Region Football League Premier Division [Tier 5] from the start of the 2024-25 season. This decision has been made by the Women’s Football Board in order to protect the integrity of the Women’s Football Pyramid and the welfare of the players and staff members at the club.”

The chair of the Women’s Super League and Championship, Dawn Airey, said: “We are deeply saddened by the impact this will have on the Reading FC Women players, staff and fans, as they have all played a key role in women’s football and within their wider community. Our priority now is to focus on supporting the current players and staff members at the club, including the [academy], to ensure that they have every opportunity to continue to participate in the women’s game.”

In their own statement, Reading said the club had “reluctantly” withdrawn from the Championship, adding: “Unfortunately, given the current economic realities of the club, the outlay required to reach these levels [Championship licence requirements] are just not possible without significant owner funding.

“The club understands the demotion to Tier 5 will come as a huge disappointment for all connected with the club. This solution, however, does provide the club with the opportunity to continue to operate a women’s football department.”

Over the past two weeks there had been increasing fears that the club may not be in a position to operate any kind of women’s football at all amidst ongoing uncertainty about a protracted sale of Reading FC by Chinese owner Dai Yongge On Friday, it is understood parents and players of multiple age-group teams within Reading’s girls’ youth ­pathway, including the Under-21s who won a senior cup last season, were informed by ­distraught members of staff that their age-group teams could not continue operating. Earlier in the day, staff learned of the club’s decision to withdraw from the Championship and there and fears of sweeping redundancies, which have not yet been confirmed.

“This is devastating for all involved,” wrote former Reading midfielder Fara Williams, England’s most-capped player, on social media on Friday. “I spent some of my best years at this club, both as a player and the girls RTC coach .. it’s shocking that it’s come to this. I feel for all the players and staff affected by this decision.”

The ex-Reading manager Kelly Chambers, who led the side to fourth in the WSL and to a Women’s FA Cup semi-final, added: “I actually don’t know what to say anymore. We can all fight from the outside but unfortunately there has to be people higher up in the club that want to fight too! How one person can destroy a club layer by layer is mind blowing! I feel so sorry for everyone! 17 years down the drain!”

Current England stars Fran Kirby and Mary Earps are among Reading’s former players, along with Wales stars Sophie Ingle and Jess Fishlock. The club reverted to part-time status 12 months ago after their relegation from the WSL and financial uncertainty meant they currently only have two first-team women’s players under contract.