New Zealand have been fined two points by the Rugby League International Federation for fielding an ineligible player in the Tri-Nations.
Fien was born in Australia and played in the State of Origin
Australian-born Nathan Fien, 27, has been banned from the rest of the tournament after playing in matches against Australia and Great Britain.
Hooker Fien was picked as he had a Kiwi-born great-grandmother, but eligibility only covers grandparents.
The verdict puts Australia in the final and makes GB favourites to join them.
We're told that it was an honest mistake that this information wasn't communicated to us, but we're certainly disappointed
After hearing the verdict, the New Zealand Rugby League said it accepted the decision and would not be taking any further action.
"The NZRL accepts it made an error and will not challenge the decision," said a statement released by NZRL general manager Peter Cordtz.
"Nathan Fien acted honestly at all times in his disclosures to the NZRL.
"Accordingly, Nathan Fien had no charge to answer; nor did any other person."
Fien's eligibility was ruled on by a committee consisting of Australia's Colin Love (chairman), NZRL's Selwyn Bennett, Rugby Football League executive chairman Richard Lewis and National Rugby League chief executive David Gallop.
Love said he was extremely disappointed by the whole affair.
"The game is based on trust between the nations and we've acted accordingly," he said.
"We're told they acted in good faith, but it was never communicated to us that it was Fien's great-grandmother and not his grandmother who was born in New Zealand.
"I don't know whether it's deceit. We're told that it was an honest mistake that this information wasn't communicated to us, but we're certainly disappointed."
The NZRL knew of Fien's eligibility problems on 19 October, two days before the second clash with the Kangaroos in Melbourne.
Love described the hearing as "one of the darkest days" in his time in charge of the ARL.
Australia have now qualified for the Tri-Nations final with four points from just two of their four group games, both wins over New Zealand.
The Kiwis and the Lions now have no points, with New Zealand's 18-14 win in Christchurch last Saturday discounted.
New Zealand only have one group match left while the Lions have three - one against the Kiwis and two against Australia, the first of which is in Sydney on Saturday.
Fien, who played for Queensland in State of Origin five years ago, was called into the New Zealand squad after the withdrawal of David Solomana.
The 27-year-old made his debut as a substitute in the 20-15 defeat by Australia and made his first start in Saturday's 18-14 win over Great Britain.
In two months' time, Fien would qualify to play for the Kiwis through residency as he plays for the New Zealand Warriors.
Lance Hohaia has officially replaced Fien in the squad for the Tri-Nations series.
Before the next Test, against the Lions in Wellington on Saturday, West Tigers' hooker Dene Halatau will replace Fien for in the squad for Saturday's game against New Zealand Residents in Greymouth.