Williams described the decision as "regrettable but understandable"
Williams have been suspended from the Formula 1 Teams' Association (Fota) after signing up for the 2010 season.
The teams are in talks over planned budgetary curbs for next year and several teams including Ferrari say they will quit if a deal is not agreed.
"Fota's decision, although regrettable, is understandable," said team principal Frank Williams.
"As a company whose only business is F1 with obligations to our partners and employees entering was unquestionable."
Team chiefs met in Monaco at the weekend to discuss the proposals put forward by International Motorsport Federation (FIA) chief Max Mosley, and further talks are planned for London on Wednesday.
Ferrari, Renault, Red Bull and Toyota have all threatened to pull out of the sport if the budgetary restrictions are forced through, but on Monday, the day after the Monaco Grand Prix, Williams broke ranks and confirmed they were signing up for next season.
At the time, Williams chief executive Adam Parr said they felt "morally and legally obliged" to make it clear the team would continue to take part in F1.
"We owe it to our employees, sponsors and fans who are affected by statements that teams may not enter next year," he added.
Teams have until this Friday to submit their entries for 2010 season. It is not clear how long Williams' suspension from Fota will be in operation.