The decision came after an unsuccessful search for a new manager following the resignation of Carl Forman just weeks into the new season.
The squad were keen to play on according to chairman Steve Clark, and were given a fortnight’s grace by the league to get their house in order.
But the club received no applications to replace Forman in the hotseat, two weeks after launching their appeal.
“At the moment no-one seems to be interested in grassroots football,” said Clark.
“We have asked one or two people, but we have no budget to play with so no-one seems to be interested.
“It’s a real struggle to get players at this level to play for no money.”
Forman took over last season and guided Town to a 10th-place finish, but family and work commitments forced him to step down just two games into the new campaign.
Both ended in heavy defeats – 7-1 at defending champions Skegness Town, and 5-1 at Grimsby Borough – which left his side bottom.
“Unfortunately, I could no longer make the commitment the role requires being self-employed with a young family,” he said.
“Since the start of the season I’ve taken on a new coaching role with the Grimsby Town Development Centres meaning that I am coaching in Grimsby every week.
“My eldest son is with Grimsby Town Academy Under 9s this season, and is there two or three times a week.
“And my other son trains in Grimsby twice a week and is with Hull City on a Thursday evening also, so my time needed to be dedicated to them and their development, as well as my additional coaching role with Grimsby.
“Given all of that something had to give, unfortunately, and that something was Louth Town.”
It has been a mixed few weeks for the White Wolves who were named the FA Charter Standard Development Club of the Year at the County FA awards earlier this month.
Town’s departure is the latest blow for the league which has been reduced to 11 teams just a month into the new campaign following the earlier withdrawals of Market Rasen Town and newcomers Heckington United.
Louth Town were forced to step down from the Northern Counties East League two years ago following the withdrawal of a major sponsor over the protracted move to a new ground.
The club took a season off before stepping down to the Lincolnshire League last season, a campaign in which they finished 10th.
They were given two week’s grace from the league to find a new manager
Clark added: “It is one of those things sadly. If we can’t do anything this year, hopefully we will come back next year.”