While there will no longer be a works team, privateers will be able to buy Countryman JCW cars from Prodrive to compete under their own steam.
"BMW Motorsport will continue to further develop the 1.6-litre turbo engine in conjunction with Prodrive," Kay Segler, the Senior VP of Mini Business Coordination, said.
"In a very difficult commercial environment, MINI has played an active role in ensuring that friends of the MINI brand can continue to participate in motorsport,"
MINI's return to the WRC has been fraught with drama, its only real bright spot coming at the hands of Dani Sordo, who brought the MINI home second at the Monte Carlo Rally in January.
The team's current lead driver, Australian Chris Atkinson, only joined the team in August after Armindo Araujo was let go.
At the wheel of the MINI, Atkinson scored points on debut in Germany and again two rallies later in France.
What awaits Atkison after this week's news remains to be seen. It is likely that without MINI funding, 'Atko' could be on the hunt for a new seat in 2013.
"One thing I can assure you is that it would be a pleasure to work with Atko again on any motorsport project," Motorsport Italia Team Manager Bruno de Piant told Speedcafe.com this week.
The MINI name will appear in the International Rally Championship (IRC), also under the auspices of Prodrive.