Rangers will start the new season in the Irn-Bru Third Division following a vote by Scottish Football League chairmen at Hampden.
The 30 SFL teams were voting on whether Charles Green's newco Rangers should enter the league and which division they should be placed in.
Twenty-nine of the 30 SFL clubs accepted Rangers as an associate member of the Scottish Football League while 25 clubs voted in favour of placing the newco team into the bottom tier.
The Scottish Premier League and Scottish Football Association were hopeful Rangers would be parachuted into the First Division, with SFA chief executive Stewart Regan claiming that putting the Ibrox club into the Third Division would bring financial catastrophe and a "slow, lingering death" of the game.
SFL chief executive David Longmuir said: "The member clubs of the Scottish Football League have voted to willingly accept The Rangers Football Club as an associate member of the Scottish Football League.
"Furthermore, the Scottish Football League's only acceptable position will be to place Rangers FC into the Third Division of the Irn-Bru Scottish Football League from the start of this season."
A statement on the official Rangers website confirmed discussions over forming an SPL2 were still up in the air. The statement read: "It was mooted last week that plans for an SPL2 would swing into action in the event of today's outcome but it is not known if this will be the case."
However Livingston chairman Gordon McDougall does not believe such a breakaway will take place.
"I don't think there is any chance of that," he told Press Association Sport. "We all want a 42-club solution to this situation with all 42 clubs working together for football but I have no idea what is likely to happen.
"We have made a decision, I sincerely hope the decision is respected and we go forward with Rangers in the Third Division. Ally McCoist and Charles Green were adamant that they would respect our decision."