It will be the first time the Burt Munro Challenge has been cancelled since it began in 2006.
Committee Chairman Craig Hyde said the decision was made at a committee meeting this week and key funders and sponsors had been notified.
"We’re absolutely gutted that it’s come to this but with a nationally significant event of this magnitude, it’s the right thing to do.
"The Government’s new traffic light system policy is mandatory for events to follow but it creates uncertainty, making it difficult to plan ahead. It doesn’t guarantee competitors and spectators will be able to travel from out of region to the event. We also foresee changes will be required in some of our management systems including ticketing, registration, security, and include alterations to infrastructure."
The committee did consider postponing the event or reducing the size to include only some of the racing programme, but in the end, cancelling was seen as the only option available.
"We know the Southland community will be disappointed the event has been cancelled. We receive a lot of support to execute the Burt and in turn support a lot of business and community groups.
"Having the motorcycle community pilgrimage their way south from as far as Cape Reinga to soak up the Burt experience, watch the races, socialise at the rally, catch up and tell a few yarns is all part of the experience."
Great South GM Tourism and Events Bobbi Brown said the cancellation was totally understandable but would have a significant impact on the Southland economy.
"It’s a huge loss. We can only hope we get back to some kind of normality in the next year, and the event will return in full swing in 2023."
The Burt Munro committee would begin preparations for the 8-12 February 2023 event, after the Government provided clarity to the events sector, Mr Hyde said.
The cancellation is one more on the list of significant events in the South that have become Covid casualties, including Alexandra's Blossom Festival, Dunedin's Santa parade and the city's Craft Beer and Food Festival.
