Strife-torn Libya withdraw as 2017 CAN hosts
Libyans play footvolley on a beach on June 27, 2014 in the eastern city of Benghazi - by Abdullah Doma
The decision was not surprising amid intense fighting between Islamist and nationalist fighters in the oil-rich North African state.
Rival militia are battling for power in a vacuum created after the collapse three years ago of the Moamer Kadhafi dictatorship.
Libya were scheduled to stage the 2013 Cup of Nations, but swapped with 2017 hosts South Africa in the hope that peace would be restored.
However, the power struggle has intensified recently with Tripoli airport closed since July as militia fight for control of the gateway to the country.
The withdrawal was announced after a Libyan delegation met CAF president Issa Hayatou.
CAF have set a September 30 deadline for applications to host the 2017 tournament with Algeria a likely candidate.
Morocco are scheduled to host the 2015 Cup of Nations.
Confirming the news CAF announced in a statement: "Libya will no longer host the Africa Cup of Nations in 2017.
"A Libyan delegation led by the country's Minister of Youth and Sports and included the president of the Libyan Football Federation revealed in a meeting with CAF President Issa Hayatou that owing to the unstable security situation in the country, Libya would not be able to host the Afcon in 2017.
"Consequently, the Secretary General of CAF, Hicham El Amrani, dispatched a circular on 23rd August, 2014 to all 54 member associations informing them of the decision and opening bids for the hosting of the 2017 Africa Cup of Nations."