Fabric in Farringdon will now close its doors permanently after the council said a "culture of drugs" existed at the venue, which opened in 1999 and has previously been voted the world's number one club by DJs.
A temporary licence suspension was already in place, following the suspected drug-related deaths of two 18-year-old men.
A Metropolitan police spokesperson said the police had felt "the need to act due to concerns about the safety of those attending the club due to the supply of class A drugs in the venue" and the recent deaths.
"We support this decision made by Islington Council's licensing committee," the Metropolitan police said.
"London has a world renowned night-time economy and people should be able to enjoy it safely, without concerns of serious crime. The Met is committed to working in partnership with those responsible for this sector to ensure that this happens."
Islington Council members reportedly heard up to five hours of evidence before deliberating on the decision for an hour.
"Fabric is extremely disappointed with Islington Council's decision to revoke our licence," the club said in a statement this morning.
"This is an especially sad day for those who have supported us, particularly the 250 staff who will now lose their jobs. Closing fabric is not the answer to the drug-related problems clubs like ours are working to prevent, and sets a troubling precedent for the future of London’s night time economy."
As the clubbing world mourned the venue's closure this morning Sadiq Khan was among those being heavily criticised for the decision.
Khan supported a Save Fabric campaign to keep the club open - which by this morning had more than 148,000 signatures - but said it was not under his remit to intervene in licensing issues, which are ultimately decided by local bodies.
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"London's iconic clubs are an essential part of our cultural landscape. Clubbing needs to be safe but I’m disappointed that Fabric, Islington Council and the Metropolitan Police were unable to reach agreement on how to address concerns about public safety," Khan said this morning.
As a result of this decision, thousands of people who enjoyed going to Fabric as an essential part of London's nightlife will lose out. The issues faced by Fabric point to a wider problem of how we protect London’s night-time economy, while ensuring it is safe and enjoyable for everyone. Over the past eight years, London has lost 50 per cent of its nightclubs and 40 per cent of its live music venues. This decline must stop if London is to retain its status as a 24-hour city with a world-class nightlife.
The mayor has been on the lookout for a new "night czar" to champion the City's buzzing night-time economy, which has been boosted by the Night Tube.
Revenues at the UK's top 100 nightclubs, many of which are in the capital, have fallen nine per cent over the last year, driven by a lack of access to funding and increased competition from pubs and bars.