The decision means Shanks, who won the individual pursuit world title in Poland in March, won't get the chance to try and emulate the achievements of fellow Kiwi Sarah Ulmer, who won pursuit gold at the 2004 Olympics.
Shanks told the ODT in September she could not understand why the individual pursuit would be targeted for the axe.
"The Olympics are about finding the fastest, strongest athletes. I think pursuit is the epitome of that.
"It would be such a shame to lose it."
The International Olympic Committee executive board agreed to a programme of five men's and five women's track cycling events as part of a plan proposed by cycling's governing body. As a result, the Olympics will lose track cycling's 4,000m individual pursuit for men and 3,000m pursuit for women.
Also eliminated are the men's and women's points races, and men's madison, events raced by Dunedin cyclist Greg Henderson.
Cycling had seven track events for men and three for women at the 2008 Beijing Games. Today's changes were designed to make sure male and females compete in an equal number of events in London.
The number of women track cyclists in London will rise to 84, up from 35 in Beijing in 2008. Women will make up 45 percent of the total number of Olympic track cyclists, compared with 19 percent in Beijing.
Dozens of current and former cyclists, including Lance Armstrong, have spoken out against dropping the individual pursuit. Among those affected are reigning 19-year-old world champion Taylor Phinney of the United States and two-time Olympic champion Bradley Wiggins of Britain.
IOC president Jacques Rogge said the committee was following the recommendations of the sport's ruling body.
"It is the advice of the UCI that the new format would be more appealing," he said at a news conference. "Of course, the concerned riders regret that. This is perfectly understandable but the executive board of UCI considered the new format would be far more appealing."
"There is a general shift as you know from endurance events more to sprint events," he added. "That is a consideration being made by the experts of cycling, not the IOC."
The new Olympic programme includes men's and women's competition in individual sprint, team sprint, keirin, team pursuit and the five-race omnium event. The omnium combines performances in a 3km individual pursuit, 200m sprint, 1km time trial, 15km points race and 5km scratch race.
Phinney posted a message on his Twitter feed saying "we have been unsuccessful in our fight ... We now move on."
Wiggins, who won the men's pursuit in Athens in 2004 and Beijing in 2008, will miss the chance to go for a third gold in the event in his home city.
"It's disappointing, but it's not something I can control or have an effect on," he said. "It would have been nice to have been back there and going for No. 3 in the individual. It's a bit drastic losing three endurance events and replacing it with something like the omnium which, in my opinion, is a poor event to watch. But it doesn't matter what we think. We're just the riders."
Reigning women's pursuit champion Rebecca Romero of Britain added: "I'm disappointed that the chance for me to defend my Olympic title has been taken away, especially at this late stage in the Olympiad only two years before Olympic qualification."
Rogge said the UCI had conducted "extensive" surveys that supported the changes.
