The Telford Independents, which was set up earlier this year by former Telford Conservative members, had applied for the status ahead of Telford & Wrekin Council's elections, which will take place in May.
The electoral commission said that the application was turned down because "the proposed constitution and financial scheme were not compliant with the provisions set out in electoral law".
Councillor Tammy Wood, one of the group's founders and its leader, said that the reasons for the rejection were because the party had not yet held its first constitutional meeting where it has to vote in its 'financial template'.
She said it means the party will not have official status recognised for the forthcoming elections, where it wants to run a total of 18 candidates.
Councillor Wood added that it would reapply to the Electoral Commission after the election and submit the extra information requested.
"It was a big ask to get all this paperwork done in the space of time we set ourselves," she added.