Luna Rossa will not compete in the 35th America's Cup in Bermuda, after changes were made to boat sizes.

Luna Rossa followed through with its threat to pull out of the 2017 America's Cup on Thursday (Friday NZT), and blasted decisions by the organisers that the Italian challenger called unprecedented and illegitimate.

Luna Rossa and Team New Zealand voted on Tuesday (Wednesday NZT) against reducing the size of the catamarans for the second time in less than a year.

However, both teams were overruled by a majority of teams, led by two-time defending champion Oracle Team USA. The other challengers were Artemis Racing of Sweden, Ben Ainslie Racing of Britain, and Team France.

The America's Cup class rules could only be changed by unanimous consent, but Oracle Team USA last week led an amendment to change the class rule to a majority vote.

Luna Rossa, backed by the fashion house Prada, said before the vote "it will be obliged to withdraw" if the rules were disrespected, and it was backed by Team New Zealand.

In a statement, Team NZ said they were "deeply saddened" by the withdrawal of their close allies Luna Rossa.

"We are quite frankly in disbelief that the continued actions of the America's Cup Event Authority have lead to the withdrawal of our great friends Luna Rossa," said Team NZ CEO Grant Dalton.

"It sends a clear and unmistakable message that the self-serving manoeuvring of rules within sports oldest trophy has consequences for not only the America's Cup but also all of sailing."

Team NZ have filed an appeal against the withdrawal of Auckland as host of the qualifier regatta and said they would be making no further comment at this stage.

Luna Rossa has been one of the strongest challengers since 2000, when it reached the America's Cup match before being swept in five races by Team New Zealand.

"Following a careful evaluation of the serious implications of this unprecedented initiative, Team Luna Rossa confirms that it will withdraw from the 35th America's Cup," a team statement said.

"Team Luna Rossa indeed considers illegitimate the procedure adopted and founded on an evident abuse of process by surreptitious use of procedures to modify the protocol in order to overturn the class rule, which instead requires the unanimity of the teams entered.

"This is an attempt to introduce boats that are substantially monotypes and in total contrast with the ultra-centennial tradition of the America's Cup, not to mention a two-month extension period to introduce further modifications to the rules, decided by the majority."

The 2013 America's Cup in San Francisco was raced in 72-foot (22-metres) cats. Last June, the teams unanimously agreed to reduce the boats to 62 feet (19 metres). Now, the boats are down to 48 feet (14 1/2 metres) for the 2017 regatta in Bermuda.

"Today is a sad day for the America's Cup," Oracle rival Alinghi said. "Luna Rossa are a team of passion, skill and determination - all the qualities needed in this great competition. They inspired us to compete in 2000, and to win. The cup is diminished without you, our friends."

While the downsizing was considered a major cost-cutting move, Luna Rossa was believed to be at an advanced stage in its development of a larger boat.

"This radical change also implies a waste of important resources already invested based on the rules that were sanctioned in June last year," Luna Rossa said. "Luna Rossa frequently advanced proposals aimed at containing costs that, however, would not have changed the nature of the boats, but these proposals have systematically been rejected by the defender."

It's not the first time Luna Rossa team principal Patrizio Bertelli, who is married to Miuccia Prada, has followed through on a threat.

In July 2013, they sat out the opening race of the challenger trials on San Francisco Bay to protest rules changes, leaving organisers with the embarrassing scenario of Team New Zealand sailing around the course alone.

"Sometimes it is necessary to make decisions that are painful but must be clear cut," Bertelli said. "As only these can make everybody aware of the drifts of the system, and therefore set the basis for the future: Respect of legality and sportsmanship."

The Italian team's withdrawal, coming eight months after Australia's entry quit because of the costs, has put in jeopardy the opening event of this year's America's Cup World Series in Cagliari, Sardinia, in June.

Team New Zealand is also going to arbitration to restore the 2017 America's Cup qualifying regatta in New Zealand, after a majority of teams voted to hold the entire race in Bermuda to save money.