The decision was reached after the SFA's independent governance committee and league sponsors staged an emergency meeting last Friday after one of the finalists, Steam Wagon United, inadvertently fielded four ineligible players in their semi-final against Dawley Town.
Wagon were set to face Shrewsbury Juniors in the final of the tournament, which was staged to help Salop Leisure League clubs return to action after the inaugural league campaign was cancelled due to Covid-19, last Saturday at the New Bucks Head.
The final was postponed after a complaint was lodged to Shropshire FA, who are the league and competition organisers.
But it has now been scrapped for good, with a social media backlash including 'possible disruption to final', concern for Steam Wagon being branded 'cheats', and the fixture between Wagon and Dawley earlier in the season which was abandoned due to off-pitch violence which led to heavy sanctions, all considered.
The FA also highlighted the tight window to finish the competition due to limited availability of sufficient facilities.
Wagon fielded four ineligible players in their 4-2 semi-final victory over Dawley, despite having been told by a member of the governing body that the players were clear to feature.
The Champions League competition rules were covered by the Shropshire Challenge Cup rules, in which rule 17 sub-section 11 states no player could feature having turned out for another club in either of the Shropshire Senior Cup or TJ Vickers County Cup.
The SFA admitted human error on their part after Wagon had attempted to clarify their position.
An entirely independent governance committee met and accepted, under the mitigation of rule 18 sub-section C, Steam Wagon should not be kicked out having made attempted appropriate checks.
Instead the clubs were told to replay the fixture last Thursday evening, two days prior to the scheduled final. But the Shropshire FA were swiftly informed by Dawley they were not prepared to replay the semi-final on health and safety grounds.
Both sides were informed Wagon would therefore play the final against Shrewsbury Juniors. But it is believed Dawley were then prepared to play, however there was insufficient time to rearrange fixture.
The board of directors, which has been reconstructed with an overhaul in the last year to freshen up the focus and meet FA gold standard football governance, met Friday morning in order to reach an outcome.
And organisers, including chief title sponsor Salop Leisure, accepted the outcome given the prospect of further disruption to the league's reputation if the final went ahead.
It caps a disappointing finale for the league's first season, which has been struck by several enforced lockdowns, but otherwise enjoyed a bright debut campaign as a new county National League feeder division at step seven.
Twenty clubs across its two divisions is already set to grow to 30 clubs for next season with further plans to expand the league in the pipeline.