India has accused Pakistan of involvement in an attack in occupied Kashmir last week that killed 40 Indian soldiers and has vowed to "isolate" its arch-rival neighbour over the attack.
Sixteen qualifying places for the Tokyo Games were to be decided at the opening shooting World Cup event in New Delhi. But Vladimir Lisin, president of the ISSF world body, said these would now go to other qualifying events.
"The International Olympic Committee informed us this World Cup will not be included in the competitions for Olympic quotas," Lisin, himself an IOC executive member, told the tournament opening ceremony late Thursday.
"The quotas will be distributed at another World Cup. No one can be discriminated against and we have to follow the IOC decision as part of the IOC family," he added.
The IOC said it was deliberating on the controversy and would soon announce a decision.
Over 500 shooters are taking part in the Indian event, for which competition starts on Saturday.
Pakistan, which has denied any role in the, says two shooters and a coach were denied visas to attend the contest.
Lisin said the International Shooting Sport Federation and the Indian organising committee had done everything possible to get the shooters to the contest.
But National Rifle Association of India president Raninder Singh said he could not go against the Indian government's decision.
Singh also insisted no final decision on the Olympic places had been taken.
"Nothing is cancelled as of now. The status as of now is we don't know," Singh told reporters. "There are meetings that are going on where the position is being assessed by the IOC and the government."
Amid widespread anger over last week's occupied Kashmir attack, some calls have also been made for India's cricket team to boycott its scheduled World Cup game against Pakistan in England later this year.
Media reports said Indian cricket's governing body, the BCCI, had prepared a letter calling for Pakistan to be banned from the cricket World Cup.
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