France won the bid to host the 2025 World Cup in January 2022. The 2021 edition of the tournament was held in England.
"Despite all the work carried out by the organising committee, it hasn't been possible to fully secure the risk of a deficit," organisers said.
"Despite the interest shown in this unique sport... the board had to decide to renounce organising this major international competition, which the International Rugby League had entrusted to France.
"The conditions of financial viability initially defined by the state to support the project, set in January 2022, were not fully met, despite the search for solutions and the additional three months granted by the state to the organizing committee at the end of 2022."
In a statement on Monday, International Rugby League (IRL) said it expected to be able to inform member nations of planned qualifying matches and alternative fixtures by July.
"The French government, particularly the Sports Minister Amelie Oudea-Castera, supported the bid team financially and granted additional time to meet benchmarks..." IRL chair Troy Grant said.
"I respect the French government's decision amid the challenges they are facing but I can't hide my disappointment, that I conveyed clearly to them in person.
"Despite our focus having been on France, we will now accelerate our consideration of other contingency options."
France will host this year's men's rugby union World Cup from September 8th to October 28th.