The 2027 Island Games will now likely be held in the Faroe Islands instead of original hosts Ynys Môn.
A statement from the International Island Games Association revealing the news said: 'This decision stems from several factors, many of them resulting from the pandemic and the necessary measures taken by the Council of Ynys Môn and the Welsh Government because of pressure on public sector finances.'
Gareth Parry, chair of the Ynys Mon organising committee: 'We are extremely disappointed to have come to the difficult decision that we are not in a position to host the Island Games in 2027.
'The impact of the pandemic and other incidents across the world over recent years have had a devastating effect on the current financial climate in Ynys Môn and Wales.
'We had secured enough funding when submitting our bid prior to covid with support from the local authority, the Charitable Trust and Welsh Government, but a recent review of the budget highlighted a significant funding gap that we are unable to meet in the current financial climate.
'Over seven years of hard work has gone into getting us to this position, and though we are extremely disappointed, the risks involved with continuing at this present time are too high.
'However, we and our partners are as committed as ever to bring these fantastic Games to Ynys Môn and will review our position on an annual basis with a view of putting ourselves forward again as soon as is practicable.'
Chair of the IIGA Jorgen Pettersson added: 'The IIGA fully understands that the world has changed since Ynys Môn made its original bid in 2018.
'Rising costs and general cutbacks are challenging for everyone.
The IIGA appreciates the openness of the Ynys Mon team and their approach to allowing the Executive to seek a replacement host and providing sufficient time to achieve this.
The IIGA looks forward to Ynys Môn coming forward with a new bid at a future date.'
It was agreed at the 2023 AGM in Guernsey that the Faroe Islands would be the preferred bidder for the 2031 Games.
The Faroe Islands had also expressed an interest to step in earlier if an opportunity arose.
The Faroes have now as a result been designated as the preferred bidder for 2027 and following the submission of a formal bid and an inspection visit by the IIGA, the final approval of the member islands will be sought in Orkney at the AGM in the summer.
The Faroe Islands have hosted the event before in 1989 when the Island Games organised its third Games, after the Isle of Man and Guernsey.
Aksel V. Johannesen, Prime Minister of Faroe Island, said: 'The Island Games will reach the Faroe Islands a bit earlier than expected.
'However, we will be all set and excited to welcome the Island Games family in 2027.
'Let's hope the Games will be a big success and create lasting memories for everyone.
'Next we will dive into the preparations with sleeves rolled up, fully committed.'
The 20th and next Island Games will be held in Orkney in 2025 with the Isle of Man, the birthplace of the Games, ready to host in 2029 subject to final approval.