The ambitious bid by the Football Association of Indonesia (PSSI) relied on financial support from the government, who said they were more concerned with the team improving on their FIFA world ranking of 136.
"PSSI has been asking for the government to give a government guarantee and declaration. The (guarantee) has not been granted at this stage," Youth and Sports Minister Andi Mallarangeng said via telephone.
FIFA's deadline for the bid registration document to be handed to them is next Tuesday, leaving the PSSI little time to convince the government to change their mind.
PSSI secretary-general Nugraha Besoes told Reuters last month he was confident of securing the necessary funding in order to build seven new stadiums.
"The government position right now is our priority in football is how to improve our national team's achievements," Mallarangeng said.
Indonesia, the world's most populous Muslim nation, have only qualified for one World Cup in 1938 as the Dutch East Indies and will miss out on qualification for the 2011 Asian Cup after a disappointing display.
"We would like a team that is strong enough to go through (to) the World Cup by its own sweat, wherever the World Cup is being held," Mallarangeng said.
"We want to have a good, strong national team that is the best in Southeast Asia and one of the best in Asia. A national team that wins the World Cup would make us just as proud wherever the World Cup is being held."
Australia, England, Japan, Netherlands and Belgium, Russia, Spain and Portugal, and United States are bidding to host the 2018 or 2022 World Cups with Indonesia, Qatar and South Korea currently in the running to host only the latter tournament.
FIFA will announce the hosts of both tournaments in December.
