THE NEAFL will be down to 10 teams from 2016 after Canberra club Ainslie withdrew from the competition.

Ainslie had a licence to play next season, but announced its immediate withdrawal this week after the AFL rejected its proposal to be Canberra's sole team in 2017.

Eastlake will now be the sole Canberra-based team in the second-tier competition that also encompasses reserves teams for the Brisbane Lions, Gold Coast, Sydney Swans and Greater Western Sydney.

The AFL's preference was for one team to represent Canberra from 2017 - either a combined Ainslie/Eastlake outfit or a Canberra representative team, which would involve a new name and colours, but Ainslie was not keen.

"This proposal from the AFL sought significant financial contribution from both Ainslie and Eastlake Football Clubs," Ainslie said in a statement.

"With this understanding, as a club we have decided to withdraw from the NEAFL competition, effective immediately, as it was not sustainable to continue to play for just one more season, and to invest our financial resources back into the facilities and infrastructure of the Ainslie Football Club precinct."

AFL NSW/ACT chief executive officer Sam Graham said both clubs had spent many months in negotiations.

"It is disappointing to see a foundation club of the NEAFL elect to withdraw from the competition but we respect their decision," Graham said in a statement.

"We now look forward to working with Eastlake to get the best possible outcome for football in Canberra."

Ainslie struggled in 2015, but managed five wins and a draw from 18 matches to finish in ninth place, while Eastlake were wooden spooners with just one victory.

The NEAFL Grand Final is being played on Saturday night between the Northern Territory Thunder, and Brisbane club Aspley.