The courts caused huge controversy at the Masters Series tournament in May, with clay court maestro Rafael Nadal and world No 1 Novak Djokovic particularly vociferous in their opposition.
The courts were criticised for being slippery and too different from the traditional red clay courts on which all other tournaments, including the French Open, are played.
Unhappy: Novak Djokovic slammed the blue courts in Madrid
The colour change was the brainchild of tournament owner Ion Tiriac, a former top 100 player, but he will now have to revert to red clay for next year's event.
ATP executive chairman and president Brad Drewett announced the decision at a meeting of the ATP board of directors in London, saying: 'After careful consideration, I have decided that blue clay courts will not be allowed next year.
'I very much believe in innovation and exploring ways to enhance our sport.
'While the blue clay may have offered better visibility on television, there were clearly issues with the quality of the courts in Madrid this year, which were not acceptable at an ATP World Tour Masters 1000 tournament, one of our top events worldwide.
Gone: The blue courts will be replaced with the traditional red clay
'Regardless of colour, we must first ensure that courts are safe and fair for players. I know that Ion Tiriac was also disappointed with the court quality in Madrid this year.
'Ion has been a great supporter of the game for many years and I continue to encourage his ideas, including the testing of blue clay at non-ATP World Tour events.
'At this time, however, it's clear that further development is required before it can be considered for use at the ATP World Tour level.'