The governing body launched an investigation into Saints` finances after their holding company, Southampton Leisure Holdings plc, went into administration.

Southampton argued that because the club itself was not in administration, they should avoid the mandatory points penalty.

But the League today decided that the club and the holding company are "inextricably linked as one economic entity", and that the 10-point deduction stands.

As the holding company, chaired by ex-club chairman Rupert Lowe, entered administration after the League`s March deadline, the points deduction will take effect this season should Southampton avoid relegation.

However, if Saints go down anyway - they are currently four points adrift with two games remaining - then they will begin next season in League One on minus 10 points.

Southampton are likely to appeal against the decision, meaning further uncertainty towards the end of a turbulent season for the club both on and off the field.

A statement from the administrators read: "The administrators and the club were informed of the League`s intention to issue a release on the findings of the independent forensic report five minutes before its publication, leaving no time for consultation and to inform fans, players and staff.

"We are of the opinion that an incorrect conclusion has been reached. The football regulations do not apply to the circumstances surrounding Southampton Football Club."

Saints also refuted the Football League's claim they withdrew their co-operation towards the investigation.

The statement concluded: "Both the club and the administrators are now considering their positions and expect to launch an appeal."

Football League chairman Lord Mawhinney acknowledged the club do have the right to appeal.

Speaking on Sky Sports News, he said: "There is an appeal mechanism and it's up to Southampton to decide whether they want to appeal and on what basis."

He added: "(The decision) wasn't inevitable, we commissioned forensic accountants to look at the situation. They gave us their report, they drew our attention to the holding company's annual report and we got external legal advice.

"The weight of all three of those made it clear that the club's affairs were inextricably linked to the holding company and, as a consequence, we took the view that an administrator had been appointed relating to the club and therefore we had no choice under our regulations but to apply the sporting sanctions.

"I have sympathy for the fans but the fans know as well as the rest of us that this has not been a shining example of football management. We have had changes and tension at board level and so the fans have had a difficult time.

"I can't imagine there is a Southampton fan in the world who welcomes this decision but the job of the Football League Board is to protect the integrity of the competition and that is what we have done."