The British Boxing Board of Control (BBBofC) said in a statement that Saturday's catchweight bout at London's 02 Arena was prohibited and "not in the interests of boxing".
It said all parties had been informed.
Promoters Matchroom and Wasserman Boxing did not call it off, however, and both fighters took part in a scheduled workout.
"As far as I'm concerned the fight is still going ahead," said Benn.
The promoters earlier issued a joint statement saying Benn, whose father Nigel famously fought Eubank's father and namesake 30 years ago, had "returned an adverse analytical finding for trace amounts of a fertility drug".
The test was carried out by the Voluntary Anti-Doping Association (VADA).
It said Benn's B sample had yet to be tested and there was therefore no confirmed rule violation and he was not suspended. Benn had also subsequently passed a test carried out by the UK Anti-Doping Agency UKAD.
"Both fighters have taken medical and legal advice, are aware of all relevant information, and wish to proceed with the bout this Saturday," the promoters' statement said before the BBBofC made its decision public.
Matchroom's Eddie Hearn said UKAD was the official tester for the fight and not VADA.
"As we stand right now, the British Boxing Board of Control is not sanctioning the fight," he told the BBC.
"That does not mean the fight is off, but there is a process we have to go through. Conor Benn is not suspended, he is free and clear to fight. There's lots going on with the lawyers."
There are precedents of promoters turning to other sanctioning bodies after failing to secure the backing of the BBBofC.
In 2012, David Haye and Dereck Chisora fought in London under the jurisdiction of the Luxembourg Boxing Federation because neither heavyweight held a British licence.
Saturday's fight was due to pit welterweight Benn against super-middleweight Eubank at a catchweight of 157 pounds.
Eubank senior last month called for the fight to be cancelled due to health concerns about dropping down to the weight limit.
