Rugby league is one of four sports to lose funding from Sport England for missing participation targets.
A total of £1.53m will be taken away from rugby league, swimming, gymnastics and equestrianism.
A Sport England statement said: “After failing to meet targets agreed between them and Sport England in 2013/14, £1.53 million has been removed from four governing bodies. Every penny of the money, a mixture of National Lottery and government funding intended to get more people playing sport, will be reinvested in alternative projects to explore new ways of producing better results in those sports.
“They include pilot programmes to attract even more people to swim, new club-led rugby league projects, investment in gymnastic clubs where demand is high and new opportunities for disabled horse riders to get on the saddle.”
Last month, the RFL and Sky Sports launched Sky Try, a new initiative that will reach 700,000 people over the course of the next seven years, working in partnership with club foundations.
Sport England chief executive Jennie Price said: “We invest significant sums of money in national governing bodies of sport to get more people active. But we can’t ignore falling numbers and missed targets where we believe there is scope for improvement, and in those circumstances we will divert money to projects that we believe will have more impact.”
It is not the first time rugby league has fell foul of funding cuts in recent years – in 2011, almost £1m of funding was lost, again for failing to meet participation targets.
Back then, RFL chief executive Nigel Wood said that the game was going through a period of transition.