A total of 60 acts were axed from the singing competition before they even had the chance to sing, The Sun reports.
Over 200 contestants had travelled to Liverpool to perform in front of Tulisa Contostavlos, Louis Walsh, Gary Barlow and new judge Nicole Scherzinger.
However, nearly a third were instantly sent home from the Echo Arena, ruining their chances of making it through to Judges' Houses.
Some hopefuls are said to have burst into tears when they were told the news. X Factor creator Simon Cowell is believed to have ordered the cull of contestants.
"It was carnage," a source said. "They were told there would be an important announcement. They went out on stage to face Tulisa, Louis, Gary and Nicole - and then the bombshell.
"There were looks of shock on people's faces. Even the judges looked upset. Simon wants a higher calibre [of acts] this year."
An X Factor spokesman added: "Some of the contestants who got a 'Yes' at their first auditions, when seen side by side against the others, were not of a good enough standard."
Watch Dermot O'Leary discuss The X Factor 2012 below: