The future of Wellington Phoenix was thrown into doubt Monday after Football Federation Australia said it would not grant the New Zealand club an extension to its 10-year licence to compete in the A-League.

The team's current licence under the Club Participation Agreement (CPA) expires at the end of the 2015-16 season in May.

Under the CPA, the club has the option of requesting that FFA lodge an application to the relevant football authorities to seek approval of Phoenix's participation in the 10-team A-League until the end of the 2019-20 season.

The FFA said such an application was required in order to seek exemptions from various statutes of Football New Zealand, Oceania Football Confederation, Asian Football Confederation and the world governing body FIFA.

FFA chief executive David Gallop said the board decision was taken in the best interests of Australian football.

"FFA has carefully evaluated the role and contribution of the Wellington franchise in terms of game development, player pathway, commercial factors, broadcast rights and the long-term strategic outlook," he said in a statement.

"The application for a 10-year extension to the licence does not meet the requirements we see as fundamental to the future growth of the Hyundai A-League."

The decision follows protracted negotiations between the FFA and Phoenix owners Welnix, with the latter party pushing for a more stable 10-year arrangement.

It also comes after the club were forced to play down reports last week they could be kicked out of the league next year in favour of a third Sydney team.

Fairfax Media reported last week that FFA are examining the possibility of replacing the Phoenix with a new team in Sydney as early as next year, in line with its stance that there are no short-term plans for expansion.

The FFA last year extended the length of the licences of all nine Australia-based clubs until 2034.

Wellington Phoenix offered no comment following the statement's release.

"The Welnix ownership group and Phoenix board will consider the situation in due course and no further comment will be made at this time," a club spokesman said.