The decision was made following a meeting of the SFL's management committee at Hampden this afternoon at which the debt-ridden club were found to be in breach of the league's insolvency rules.

Today's news is the latest twist during what has been a traumatic few weeks for the West Lothian club, who appeared to have been hauled back from the brink of extinction less than a week ago.

That was after the SFL gave the thumbs-up to a rescue package led by former Cowdenbeath owner Gordon McDougall and ex-Dumbarton chairman Neil Rankine, which would allow the club to survive.

However, the league warned Livi could still face a range of sanctions for commencing insolvency proceedings and they today elected to follow the precedent set when Gretna went into administration a year ago.

An SFL statement read: "At a meeting today of the league management committee, Livingston Football Club were found to be in breach of rule 76.2 relating to insolvency.

"The sanction imposed was to place Livingston Football Club in the Third Division for season 2009-10.

"We believe a Third Division placement offers Livingston Football Club the chance of continuing their membership of the SFL."

Livingston's relegation has led to Airdrie United and Cowdenbeath being promoted from the Second and Third Divisions, respectively.

However, Livi do have the right of appeal and can do so in the next 10 days.

With the league due to kick-off this weekend, that would almost certainly lead to the postponement of their, Airdrie's and Cowdenbeath's opening-day fixtures.

Relegation to the Third Division was the final nail in the coffin for Gretna a year ago, with administrators pulling the club out of the league altogether.

The SFL believe Livingston are better equipped to avoid a similar fate but interim manager Donald McGruther worryingly branded today's decision "the death knell" of the club.

McGruther, of administrators Mazars, was put in charge of Livi by the Court of Session in Edinburgh almost two weeks ago after West Lothian Council took legal action to reclaim a £330,000 debt.

Until then, the club had been under the control of controversial Italian businessman Angelo Massone, who refused a £25,000 offer to surrender his shares.

McGruther was on the brink of liquidating Livingston when the SFL dramatically intervened following a meeting of their management committee on Thursday.

They said they would ask their clubs to consider a rule change that would effectively allow Massone to be forced out of the club and a takeover to to be completed.

In the end, Massone sold his shares to Rankine and McDougall's consortium for a reported £50,000, though Press Association Sport understands any rule change was doomed to failure.

McGruther said of the SFL decision today: "I'm extremely disappointed, especially after the help they gave last week.

"In my view, this represents the death knell of Livingston Football Club.

"Unless I'm extremely lucky and the consortium are prepared to take a view that they can survive in the Third Division playing out of Almondvale, I do not think it makes economic sense."