FIFA has banned Peru from international competition, said a leading official at the South American Football Confederation (CSF).
Sepp Blatter, president of world soccer's ruling body, warned last week Peru had until Monday to end a long-running feud between their football federation (FPF) and government or face an immediate international ban.
"FIFA has suspended Peru from all activity," CSF secretary general Eduardo de Luca told reporters at his organisation's headquarters in the Paraguayan capital on Monday.
The Peruvian government's Institute of Sports (IPD) does not recognise FPF president Manuel Burga, claiming his election was irregular.
"If Burga's position is going to remain the same as before ... this is a dialogue of the deaf," IPD president Arturo Woodman told Reuters.
"There is absolutely no intervention by the government. What there is, is respect for Peruvian law. He (Burga) cannot be a director."
De Luca said FIFA would deal with Peru's membership at its next executive committee meeting in Tokyo next month but added the CSF was confident the row could be resolved.
Peru have already been stripped of the right to host next year's South American under-20 championship because of the dispute.
The participation of Peru in the 2010 World Cup qualifiers, which are just past the halfway stage in South America, is now in doubt as are their entries for the Libertadores Cup, the region's European Champions League equivalent.
When the draw is made on Tuesday for the 2009 Libertadores there will be blanks where Peruvian club names would normally be placed, said de Luca.
Peru, who have not reached the World Cup finals since 1982, are bottom of the 10-nation South American group with seven points from 10 matches.
FIFA, which prohibits government intervention in football affairs, was not immediately available for comment.