Immigration spokesman Steven Woolfe was excluded from the contest to replace Nigel Farage, who stood down after achieving his life's mission of Brexit in the June 23 referendum on Britain's EU membership.
The decision triggered immediate chaos within UKIP -- Britain's third-biggest party by the popular vote -- with three members of their ruling National Executive Committee (NEC) resigning in protest.
Woolfe, a member of the European Parliament (MEP), said he suffered technical problems submitting his papers ahead of the midday Sunday deadline.
"By a clear majority of NEC members, Steven Woolfe MEP's application was considered to be ineligible as a result of a late submission and as such he did not meet the eligibility criteria," he said.
The announcement immediately led to claims of foul play.
Woolfe said he was "extremely disappointed" to have been excluded from the contest and said the NEC was "not fit for purpose".
Businessman Arron Banks, the party's main financial backer, said the decision to exclude Woolfe was the "final straw", calling it effectively a "coup".
"Steven Woolfe is a popular candidate among UKIP's members and should be permitted to represent those that wish to vote for him," they said.
"To purposefully trawl for technicalities upon which to base a decision to deny his inclusion is not in the best interests of the membership and truly injurious to UKIP."
Farage and the rise of UKIP, an anti-EU, anti-mass immigration party, played a key role in the push for a referendum on Britain's membership of the European Union.
They campaigned all-out for Britain to leave the EU in the June referendum on its membership of the bloc.
Farage, who first became UKIP leader in 2006, stepped down after the vote to quit the EU, saying his "I want my country back" mantra was now "I want my life back".
The six candidates allowed to stand are MEPs Jonathan Arnott, Bill Etheridge and Diane James, local authority councillor Lisa Duffy, NEC member Elizabeth Jones and Phillip Broughton, who stood as a prospective member of parliament.
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