Michael Schumacher has been stripped of pole position for the Monaco Grand Prix and will have to start Sunday's race from the back of the grid.
MONACO GRID POSITIONS
1 F Alonso
2 M Webber
3 K Raikkonen
4 JP Montoya
5 R Barrichello
6 J Trulli
7 D Coulthard
8 N Rosberg
9 G Fisichella
10 R Schumacher
The Ferrari driver controversially beat Renault's Fernando Alonso to pole position in qualifying on Saturday.
But after an eight-hour inquiry, race stewards said he deliberately stopped on the track after running wide, stopping rivals setting a faster time.
Alonso will now start on pole ahead of Williams driver Mark Webber.
It is notoriously difficult to overtake on Monaco's tight and twisting circuit, giving the driver on pole position a major advantage.
In the incident at the Rascasse hairpin, Schumacher's Ferrari ran wide, before the engine stalled as Schumacher made an attempt to reverse it away from the barrier.
A seven-time world champion wants us to believe that he didn't do it on purpose - it's fairyland
Renault team boss Flavio Briatore
The incident prevented Alonso, among others, from setting a faster time at the end of the session.
The stewards' verdict means Ferrari will now have both cars at the back of the grid after Schumacher's team-mate Felipe Massa crashed out in the first part of qualifying.
Stewards heard evidence from Schumacher and Ferrari personnel, and reviewed video evidence and data supplied by Ferrari and governing body the FIA.
In a statement, the stewards said they had found "no justifiable reason for the driver to have braked with such undue, excessive and unusual pressure at this part of the circuit.
"Therefore, we are left with no alternative but to conclude that the driver deliberately stopped his car on the circuit."
Ferrari were furious with the decision, and said it was a simple case of driver error rather than any underhand tactic.
Your enemies believe one thing and the people who support you believe another
"We totally disagree with it," said Ferrari team boss Jean Todt.
"Such a decision creates a very serious precedent, ruling out the possibility of driver error.
"Michael was on his final timed lap and was trying to put his first place beyond doubt, as could be seen from the fact that his first split time was the best.
"With no real evidence, the stewards have assumed he is guilty."
Renault team boss Flavio Briatore, who was Schumacher's team boss at Benetton from 1991-95, disagreed with Ferrari's view.
"It wasn't like he hit the barriers - he just parked the car. I can't believe it," he said.
"I don't know why he needed to do it. I think he is taking everyone for a ride.
Alonso was on a faster lap when Schumacher blocked the track
"Someone who was seven times a world champion wants us to believe that he didn't do it on purpose - it's fairyland."
But Schumacher, speaking before the stewards' decision, said he had made a genuine error.
"No, I didn't cheat - and I think it is pretty tough to be asked if I did," he said.
"It was a touch too much going into that final corner. I didn't know I was fastest, so I was really pushing on that lap.
"I came into the bend hard, locked up the front and went wide. I checked with the (pit) guys what position I was and they said P1.
"At the start I hadn't stalled the car but it was impossible to reverse because of the traffic behind me.
"There were cars coming behind me, I knew it, but I couldn't see them well enough to judge when to pull out. Then the engine stalled.
"Whatever you do in certain moments, your enemies believe one thing and the people who support you believe another."
Schumacher's punishment has lifted McLaren's Kimi Raikkonen to third, with team-mate Juan Pablo Montoya fourth, courtesy of another penalty, imposed on Renault's Giancarlo Fisichella.
Fisichella set the fifth fastest time but he was punished after the session for holding up David Coulthard. He lost his fastest three laps and will start ninth.
Rubens Barrichello is fifth with Toyota's Jarno Trulli up to sixth but Jenson Button registered his worst qualifying display of the season and will start 13th for Honda.
The Englishman blamed an unexpected and unexplained lack of grip on new tyres.
Monaco Grand Prix revised grid positions:
1. Fernando Alonso (Sp) Renault one minute 13.962 seconds
2. Mark Webber (Aus) Williams-Cosworth 1:14.082
3. Kimi Raikkonen (Fin) McLaren-Mercedes 1:14.140
4. Juan Pablo Montoya (Col) McLaren-Mercedes 1:14.664
5. Rubens Barrichello (Bra) Honda 1:15.304
6. Jarno Trulli (Ita) Toyota 1:15.557
7. David Coulthard (GB) RedBull-Ferrari 1:16.426
8. Nico Rosberg (Ger) Williams-Cosworth 1:16.636
9. Giancarlo Fisichella* (Ita) Renault 1:14.396
10. Ralf Schumacher (Ger) Toyota 1:14.398
11. Christian Klien (Aut) RedBull-Ferrari 1:14.747
12. Vitantonio Liuzzi (Ita) Toro Rosso-Cosworth 1:14.969
13. Jenson Button (GB) Honda 1:14.982
14. Jacques Villeneuve (Can) BMW Sauber 1:15.052
15. Nick Heidfeld (Ger) BMW Sauber 1:15.137
16. Christijan Albers (Ned) Midland-Toyota 1:15.598
17. Tiago Monteiro (Por) Midland-Toyota 1:15.933
18. Scott Speed (US) Toro Rosso-Cosworth 1:16.266
19. Takuma Sato (Jpn) Super Aguri-Honda 1:17.276
20. Franck Montagny (Fra) Super Aguri-Honda 1:17.502
21. Felipe Massa (Bra) Ferrari no time
22. Michael Schumacher** (Ger) Ferrari 1:13.898
* Fisichella docked his three fastest times for holding up Coulthard
** Schumacher sent to back of the grid for deliberately blocking the track during qualifying