The Final Fantasy spinoff, which was announced in 2006 as a companion project to Final Fantasy XIII, was scrapped in the last few weeks, according to Kotaku.
The game's cancellation has allegedly been kept quiet so as not to negatively impact Square Enix share prices.
When asked whether or not the game was still in development, Square Enix issued the following statement: "We have no information on the status of Final Fantasy Versus XIII, but will be sure to update you as it becomes available."
Updates on Final Fantasy Versus XIII have been sporadic ever since its announcement, with Square Enix releasing its first trailer last year, before admitting that the title was yet to enter production.
Recent reports suggested that Final Fantasy Versus XIII would be rebranded to become a main entry in the long-running fantasy series.
It is thought that elements of the game would be used in Final Fantasy XV, which is said to feature open world gameplay and be bigger than Skyrim.
Square Enix is likely to provide more information during upcoming Final Fantasy events in Tokyo.
Watch Final Fantasy Versus XIII's 2011 trailer below: