Originally scheduled as the sixth round of the 2020 campaign, the Porto-based event was due to take place on May 21-24 before it was indefinitely postponed in late March along with Rally Italy amid the worsening COVID-19 crisis.
Efforts had been underway to move Rally Portugal to the end of October, potentially slotting in between Rally Germany and Rally GB, but a statement from the Automovel Club de Portugal issued on Thursday revealed these plans have now been abandoned.
It becomes the second round to be cancelled outright after Rally Chile, which was scratched off the calendar due to social unrest late last year.
The ACP's statement read: "After a joint assessment together with our partners, the various municipalities, national authorities and sponsors, all health and safety conditions needed to run the WRC Vodafone Rally de Portugal in a safe way are not achievable given the unpredictable situation that we live in these days, and also the uncertainty of opening the national borders or airspace.
"Due to this critical situation, the Automovel Club de Portugal is forced to cancel the Portuguese round of the 2020 FIA World Rally Championship.
"The Automovel Club de Portugal deeply regrets this decision. But it is the responsible decision bearing in mind the thousands of supporters, teams, municipalities, sponsors and all the people involved in the event, that was responsible in 2019 for an economic impact in the national economy of more than 142 million Euros."
It added that the ACP has already applied for Rally Portugal to be given its usual May date on next year's WRC calendar.
The opening three rounds of this year's schedule have been completed, although last month's Rally Mexico was cut short by a day in order to allow teams to return to Europe safely at a time of growing uncertainty surrounding international travel.
As things stand, the Safari Rally in Kenya is due to be the next round of the 2020 WRC season on July 16-19.