The decision by an independent three-man panel confirmed London Welsh as being five points adrift of Sale Sharks at the bottom of the table, with just four matches remaining.
The club were punished for fielding an ineligible player - the New Zealand-born scrum-half Tyson Keats - in 10 Premiership games this season.
London Welsh have Bath, Northampton, London Irish and Worcester to play and their captain Jonathan Mills tweeted stoically "The dragon will turn into a Phoenix". But with relegation looming, the club argued their players have been unfairly punished for the "unnecessary fraudulent actions of one individual".
Mike Scott, the club's former team manager, made a mistake when he applied for Keats' ancestry visa and instead of re-submitting the forms he attempted to cover it up.
Scott told the club that a visa had been granted. Meanwhile, he submitted false documents to the Rugby Football Union, including a forged passport, in a bid to pass Keats off as having been born in England.
Scott was subsequently banned for life by the RFU and he accepted a police caution on February 14 for his actions in falsifying registration documents.
London Welsh chief executive Tony Copsey said: "We are particularly disappointed for the players, who've given everything they can for the club, and ultimately it is they who have been punished for something completely beyond their control.
"However, there are still four games remaining in the season and the focus and efforts of the players, the coaching staff and everyone at London Welsh is now on those remaining matches."
London Welsh were also hit with a suspended five-point penalty in the original disciplinary hearing but that was overturned on appeal.
- Sports & Recreation
- London Welsh