Lewis Hamilton's McLaren team have sensationally been excluded from the 2007 Formula One world championship and fined 100 million dollars (£50 million) as punishment over the Ferrari spying scandal.

The decision by the FIA's World Motor Sport Council (WMSC), meeting in Paris today, effectively hands the constructors’ title to Ferrari but as it punishes only the team and not individual drivers, therefore keeps alive Lewis Hamilton’s dream of winning the world title in his debut season.

Even though the WMSC could have thrown both drivers out of the championship, their decision still ranks as the most severe punishment handed out in the history of the sport.

A statement issued by the WMSC following a 10-hour meeting at the FIA headquarters in Paris said: “The WMSC have stripped Vodafone McLaren Mercedes of all constructor points in the 2007 FIA Formula One world championship and the team can score no points for the remainder of the season.

“Furthermore, the team will pay a fine equal to 100 million dollars, less the FOM (Formula One Management) income lost as a result of the points deduction.

“However, due to the exceptional circumstances in which the FIA gave the team’s drivers an immunity in return for providing evidence, there is no penalty in regard to drivers’ points.

“The WMSC will receive a full technical report on the 2008 McLaren car and will take a decision at the December 2007 meeting after what sanction, if any, will be imposed on the team for the 2008 season.”

Having survived unscathed, Hamilton and his McLaren team-mate Fernando Alonso are still sitting first and second in the driver's championship on 92 points and 89 points respectively after Sunday's Italian Grand Prix at Monza and on course for one of the most exciting finishes to a season in years. Only four races remain in the 2007 campaign, starting with Sunday's Belgian Grand Prix.

An expulsion for the pair would have left the way open for the Ferrari pair of Kimi Raikkonen (74 points) and Felipe Massa (69) to contest the title, but it now appears the Maranello-based team will have to be content with the constructors' title. Ferrari, who had trailed McLaren by 23 points, are now 43 points ahead of BMW, their nearest rivals.

Whatever the rights and wrongs of the decision, there is no doubt that the whole sorry incident is a body blow for the sport itself. Bernie Ecclestone, the commercial rights holder for Formula One, had said after an earlier hearing that the scandal over the possession of a large dossier of Ferrari technical secrets by Mike Coughlan, who was suspended as the McLaren chief designer this month, had been an unwelcome distraction from the action on the track this season.

“There’s been so much talked about this spying nonsense, it’s even taking away from what’s going on on the track,” he said. “I don’t like it.”

Max Mosley, the president of the FIA, was determined for sanctions to be taken if wrongdoing was proven on McLaren's part and had made it clear that the Woking-based team were in a potentially serious predicament. “The credibility of F1 and sporting fairness is at stake,” he said.