Gay Catholic group Acceptance has been struggling since the very start to put on the event and says the church's position will isolate young gay Catholics who need support.
Acceptance's convener, Paul Harris, says it was meant to be a forum gathering parents, young people and priests to talk about spirituality, sexuality and the conflict that can exist between the two in the Catholic Church.
"We're really trying to offer something to say you can be Catholic and you can be gay, and just trying to bring the two together in some way," he said, "Because there are a lot of people out there who are gay, who go to church and love their church but find it very difficult."
The group initially tried to have the event included in next month's official Youth Festival but it was rejected by World Youth Day organisers.
Jesuit group MAGiS offered to include the forum in its festival but was contacted by World Youth Day and instructed to withdraw support for the event after everything was arranged.
"That's very disappointing," Mr Harris said, "Because we've had so much support from so many people within the church, unofficial support.
"There's a lot of people there who see what we're trying to do as very important."
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