"I am disappointed we won't be running it," Ensoc president Graeme Walker (22) said.
The association in October met Dunedin authorities, including the mayor, police and Fire Service representatives and the University of Otago, to discuss ways the Undie 500 could be held to avoid last year's trouble.
Almost 1000 students participated then, and the disorder resulted in police, many in riot gear, arresting 69 people and being pelted with bottles.
More than 70 fires were lit.
"We didn't condone that sort of behaviour. It has put a bad image on the Undie 500," Mr Walker said.
In order to continue, Ensoc proposed to organise a controlled Undie 500, aimed at preventing students from congregating on Dunedin streets by holding a weekend of festivities, including a large concert.
Without support from the authorities, this idea has now been quashed.
"This hasn't stopped riots. It has only stopped us running the Undie 500," Mr Walker said.
But the rally may be forced "underground", in his opinion, judging by the number of people signing up to the social networking sites Bebo and Facebook.
By last night, 396 had joined the Facebook group "I'm going on the Undy [sic] 500 with or without Ensoc".
The site says, among other statements, "If the official undy falls through, we will be organising the next best thing. Get all your mates to join up, because the more people in on this the more seriously we can start organising this backup event."
It is believed Friday, August 22, has been chosen by the group.
Otago University Students Association president Simon Wilson said he was concerned about a "rogue" group arriving in the city.
"These people are not coming to show the engineering behind their vehicles. They are focused on drinking."
While he welcomed the cancellation of the Undie 500, "if it is going to happen, it is better it is controlled".
Dunedin Mayor Peter Chin said, "I am pleased they have come to this decision.
"If another group comes, I am sure the authorities that monitor these things will take appropriate steps."
University of Otago chief operating officer John Patrick said, "It is a sensible decision under the circumstances."
Police declined to comment last night.
