The second leg of the final of the Palestine Cup, played between the winners of cup competitions in the West Bank and Gaza, was initially delayed in July after Israel denied travel permits to most of Khadamat Rafah's players.
The Gazan side had drawn 1-1 at home with West Bank team Balata FC in the first leg, and the victors of the return leg would have represented the Palestinians in the Asian Champions League.
But this week an Israeli court rejected an appeal against the original decision, after security objections. "There is frustration and despair among the players," Jamal Harb, president of Khadamat Rafah, told AFP Thursday.
Israel's Shin Bet intelligence agency said in a statement "a security examination revealed information linking most of the members of the delegation to terror."