Tigerair Australia has announced it will permanently stop flying between Bali and Australia, "effective immediately".

The decision comes as Indonesian authorities refused to grant the airline the necessary approval to operate flights to and from Bali.

Indonesian authorities informed Tigerair today it would have to change its operating model to comply with regulatory standards.

Tigerair Australia CEO Rob Sharp said such a change "would take at least six months to implement and would compromise the airline’s ability to offer low-cost airfares to Australians".

As a result, its "only option" would be "to withdraw from flying to Bali altogether".

The airline will offer full refunds to customers and work with Virgin Australia to support those stranded in Bali.

Tigerair offered its apologies to customers.

"We will continue to work around the clock to support [the passengers] as best we can," it said in a statement.

The airline had earlier cancelled today’s flights pending "final approval" from Indonesian authorities.

Passengers were notified last night and offered full refunds.

The airline said it will now work towards "alternative opportunities."