The Gibraltar Football Association (FA) is appealing FIFA's decision to deny its bid to become a member.
Despite the British overseas territory becoming a member of UEFA last year, FIFA President Sepp Blatter said yesterday it was not recognised as a country.
The sovereignty of Gibraltar, which borders the southern tip of Spain, is disputed.
It won a Court of Arbitration for Sport (CAS) appeal in order to be accepted as a UEFA member, beginning its qualifying campaign for Euro 2016 with a 7-0 loss to Poland earlier this month, in a game played in Portugal.
Speaking yesterday at the conclusion of a FIFA Executive Committee meeting in the Swiss city of Zurich, Blatter said: "The football association of Gibraltar cannot be accepted as a member of FIFA, according to article 10 of the FIFA statutes.
"The applicant must organise and supervise football in one country, being an independent state, according to the FIFA statutes."
The FIFA Statutes define a country as "an independent state recognised by the international community".
But the Gibraltar FA has said it is launching an appeal with CAS.
Describing the decision as "extremely disappointing", a spokesperson said: "We expected this decision by FIFA based on their statutes which, in their view, states Gibraltar is not an independent territory so we have initiated our appeal to CAS.
"That's our next step.
"We are a UEFA member nation now and we will take it to the next stage - if you look at the history of our UEFA membership that's the way it went as well."
They added: "The Gibraltar Football Association is extremely disappointed that once again political issues are being allowed to interfere with and take precedence over sporting considerations."
FIFA's decision means Gibraltar will, as it stands, not be included in the qualification stage for the 2018 World Cup in Russia, which is due to begin in the second half of 2016.
May 2014: British Prime Minister sabotaged Madrid 2020 bid in row over Gibraltar, it is claimed
January 2014: Top seeds in Euro 2016 qualifying draw announced by UEFA
May 2013: Gibraltar becomes UEFA member despite Spanish objections