Rangers newco have been voted into Division Three following a meeting of Scottish Football League clubs.
The SFL clubs met at Hampden Park on Friday to vote on the fate of Charles Green's Sevco Scotland Limited, who were refused admission into the Clydesdale Bank Premier League.
It is thought the Scottish Football Association and Scottish Premier League had offered a reorganisation of the structure if Rangers were placed in Division One.
But a majority of 25 of the 30 SFL clubs voted that Rangers newco should start in the bottom tier.
Dundee, who asked not to vote, are set to take the place of Rangers in the Scottish Premier League.
Twenty-nine of the 30 SFL clubs accepted Rangers as an associate member of the Scottish Football League while 25 clubs voted in favour of placing the newco team into the bottom tier.
SFL chief executive David Longmuir said: "The member clubs of the Scottish Football League have today voted to willingly accept The Rangers Football Club as an associate member of the Scottish Football League.
"Furthermore, the Scottish Football League's only acceptable position will be to place Rangers FC into the Third Division of the Irn-Bru Scottish Football League from the start of this season."
Longmuir also stated that he was 'comfortable' with the outcome of the vote and that the decision from the SFL clubs was taken with the sport's best interests at heart.
He said: "I'm comfortable today that the Scottish Football League made a very, very decisive decision that was based on sporting fairness and I think the Scottish Football League were in the right place to make that decision.
"This decision followed a tried-and-tested process and was taken in cognisance with the other options which were available for consideration.
"Today's decision has been one of the most difficult for all concerned but it has been taken in the best interest of sporting fairness which is the fundamental principle of the Scottish Football League.
"The Scottish Football League has been entirely consistent with our willingness to work with other bodies to ensure that we focus on rebuilding our game, restoring pride in our game and exploring revenue streams and our willingness to achieve these aims does not alter."