Brian Mawhinney, the Football League chairman, insists Luton Town's 20-point deduction is vital to "protect the integrity" of the competition. The League Two side will start the new season with a 30-point deficit after being hit with the penalty today as they were unable to agree a Company Voluntary Agreement (CVA) to exit administration.

Luton had already been deducted ten points by the FA in June for breaching regulations over payments to agents, but this latest deduction means they will start the season knowing they face an uphill battle to avoid relegation out of the Football League.

The club went into administration in November and were automatically deducted ten points as a result and the Football League have now followed the precedent they set with Leeds United last season by inflicting a further deduction on Luton. Leeds were deducted 15 points after they also failed to obtain a CVA, and despite taking the matter to court, the deduction was upheld.

Mawhinney admits the Football League Board must ensure such penalties are levied. "The board's primary responsibility is to protect the integrity of their competitions," he said. "This often means making difficult decisions which require balancing the interests of fans, the club's creditors and the other teams in the League.

"We will continue to that responsibility very seriously."

A Football League statement said: "Luton Town were unable to agree a CVA with their creditors and as a consequence are unable to satisfy the normal conditions of the League's insolvency policy for exiting administration.

"The board decided, however, that they were prepared to exercise their absolute discretion under their 'exceptional circumstances' provisions in order to accommodate the new entity.

"In accordance with recent precedent, the board decided to include the following principle conditions of entry as a pre-requisite to the exercise of that discretion.

"1) The new company (Luton Town 2020) should pay the unsecured creditors the amount offered at the time of the CVA hearing (16 pence in the pound).

"2) A 20-point deduction should apply in the 2008-09 season, which also takes into account the fact that this is the club's third insolvency event in the last ten years."

Luton were relegated from League One last season.