Indonesia is the world's most populous Muslim-majority nation and does not have formal diplomatic ties with Israel, while publicly supporting Palestine. It is unclear who could now host the tournament.
FIFA has announced it had removed Indonesia as hosts of this year's Under-20 World Cup amid political turmoil over Israel's participation.
The decision on Wednesday followed a meeting in Doha, Qatar between Indonesian football federation president Erick Thohir and Gianni Infantino, the president of FIFA, football world's governing body.
FIFA's statement added that a new meeting with the president of the Football Association of Indonesia will be scheduled soon for further discussions.
It is unclear who could now host the tournament, which was scheduled to be played in six stadiums in Indonesia.
Argentina, which did not qualify for the tournament, is reportedly interested in hosting.
"A new host will be announced as soon as possible, with the dates of the tournament currently remaining unchanged," it added.
Israel qualified in June of last year for its first Under-20 World Cup, but the country's participation in the official draw for tournament groups, scheduled to be held Friday in Bali, provoked political opposition this month.
FIFA removes Indonesia as host of FIFA U-20 World Cup 2023™— FIFA Media (@fifamedia) March 29, 2023
Support for Palestine
Indonesia is the world's most populous Muslim-majority nation and does not have formal diplomatic relations with Israel, while publicly supporting the Palestine.
Indonesia's host status for the tournament was cast into doubt last Sunday when FIFA postponed the draw.
A suspension could remove Indonesia from Asian qualifying for the 2026 World Cup. The continental qualifiers start in October.
FIFA seemed to remove all blame on Wednesday from Thohir, the former president of Italian club Inter Milan — the team Infantino supports — and a former co-owner of the Philadelphia 76ers.
FIFA staff will continue to work in Indonesia in the months ahead, the governing body said, "under the leadership of President Thohir."
Football and public authorities in Indonesia agreed to FIFA's hosting requirements in 2019 before being selected to stage the 2021 edition of the Under-20 World Cup.
The coronavirus pandemic forced the tournament to be postponed for two years.
But Indonesian President Joko Widodo said on Tuesday evening that his administration objected to Israel's participation.
He told citizens that the country agreed to host before knowing Israel would qualify.
Israel qualified for the tournament by reaching the semifinals of the Under-19 European Championship.
Israel plays in Europe as a member of UEFA after leaving the Asian Football Confederation in the 1970s for political reasons.