Mr Woolfe, 48, who lives near the city centre with his wife Fiona and young daughter, had been tipped as the front-runner to succeed Nigel Farage.
But he missed the Sunday noon deadline for submitting nomination papers.
Mr Woolfe had hoped the party would be lenient with him given the computer problems he experienced on the day but this proved not to be the case.
Allegations later surfaced his membership of the party had lapsed for a period but this was flatly denied. And it emerged he had not declared a spent drink driving conviction when seeking election as a police and crime commissioner in apparent contravention of electoral rules.
UKIP’s returning officer Adam Richardson said in a statement released yesterday: “By a clear majority of NEC members, Steven Woolfe MEP’s application was considered to be ineligible as a result of a late submission and as such he did not meet the eligibility criteria. His membership of the party was not in question.”
Mr Woolfe later released a statement in which he grudgingly accepted the ruling.
He said: “I am extremely disappointed by the UKIP NEC decision to exclude me from the party’s leadership election.
“Having been a committed member of UKIP, standing for the party in multiple elections, acting as a spokesman at the highest level, I wanted to take this opportunity to stand for leader to inject my ideas, plans and passion into the party.
“Over the course of this leadership election, the NEC has proven it is not fit for purpose and it confirmed many members’ fears that it is neither effective nor professional in the way it governs the party.
“The NEC panel have even accepted that they were wrong to raise questions of my membership of the party, as I have been a full member since 2011. They did not identify my payments in the UKIP records until I showed them my own bank statements. After providing evidence of the payments and donations I have made to the party, they were satisfied this was not an issue.
“They have failed to accept that there were serious issues with the application system despite providing evidence that attempts of submission were made before the deadline. The NEC deny this is the fault of the UKIP system.
“Furthermore, highly confidential information about me held in party documents has been leaked to the press and the NEC has not sought to investigate this gross breach of privacy.”
The North West MEP added: “Although I am out of the contest I wish the other candidates well and hope they can show UKIP has a positive, inclusive, patriotic vision for Britain.”
The leadership contenders left in the race are: Cllr Bill Etheridge MEP, Diane James MEP, Elizabeth Jones, Jonathan Arnott MEP, Cllr Lisa Duffy and Phillip Broughton.