FORMULA One has been thrown into chaos after the Formula One Teams Association (Fota) confirmed it is to set up a rival series from next season.

Eight of F1's major teams - including McLaren, Ferrari and Brawn GP - have decided to cut loose, frustrated by stalled negotiations with world motorsport boss Max Mosley over his controversial budget cap proposals.

The move means next season's "official" F1 grid will look very different to this year with only Williams and Force India still taking part.

Although other teams have pledged to join the series only a couple, Prodrive and Lola, appear to be anywhere near to having a viable car ready to race in 2010.

A statement issued by the rebels said: "The teams have declined to alter their original conditional entries to the 2010 F1 Championship.

"We've no alternative than to commence preparation for a new championship."

Mosley was insistent on introducing a voluntary £40m budget cap for teams to curtail a "financial arms race" in F1.

But Fota refused to agree to his conditions, prompting championship leader Brawn GP, Ferrari, McLaren, Renault, Toyota, BMW Sauber, Red Bull Racing and Toro Rosso to take their drastic action.

They announced their decision following a four-hour meeting on Thursday night ahead of this weekend's British Grand Prix at Silverstone.