The "OneLove" armband due to be worn by the likes of England captain Harry Kane and Germany counterpart Manuel Neuer was designed as part of a campaign to promote inclusivity.
The armbands had widely been viewed as a symbolic protest against laws in the World Cup host nation Qatar, where homosexuality is illegal.
"FIFA has been very clear that it will impose sporting sanctions if our captains wear the armbands on the field of play," the seven teams said in a joint statement.
Under FIFA rules, players wearing kit that is not authorised by football's world governing body could be shown a yellow card.
If that player was then shown a second yellow card, they would be sent off.
"As national federations, we can't put our players in a position where they could face sporting sanctions including bookings, so we have asked the captains not to attempt to wear the armbands in FIFA World Cup games," the federations of England, Wales, Belgium, Denmark, Germany, the Netherlands and Switzerland said.
Monday's decision came just hours before England were due to kick off their World Cup campaign against Iran and the Netherlands opened their tournament against Senegal. Wales are also playing later Monday against the United States.
On Saturday, Germany's veteran skipper Neuer insisted he planned to wear the "OneLove" armband regardless of the threat of sanction.
"We have the complete backing of the (German Football Association), we have no fear," Neuer remarked.
When the "OneLove" initiative was announced in September, Kane said he was "honored" to join fellow World Cup captains in donning the armband.
"As captains we may all be competing against each other on the pitch, but we stand together against all forms of discrimination," Kane said.
"This is even more relevant at a time when division is common in society. Wearing the armband together on behalf of our teams will send a clear message when the world is watching."
Qatar's laws against homosexuality have been long-running controversy in the build-up to the World Cup.
Former Qatari international and World Cup ambassador Khalid Salman sparked outrage earlier this month after calling homosexuality "damage in the mind" in an interview with German television.
FIFA President Gianni Infantino has repeatedly insisted however that all fans and visitors to the finals would be welcome, regardless of sexual orientation.
"I've been speaking about this topic with the highest leadership, they can confirm that I can confirm that everyone is welcome," Infantino said before the tournament kicked off.
"If you're a person that says the opposite, well it's not the opinion of the country, or FIFA. Everyone that comes to Qatar is welcome."
But LGBTQ rights campaigners and fan groups slammed Monday's decision, accusing FIFA of "bullying" teams into deciding not to wear the armbands.
"The OneLove armband was the tiniest of gestures," said prominent LGBTQ activist Peter Tatchell in a statement.
"It was a weak campaign but even that was too much for FIFA, who have bullied the England team to not wear it."
The Football Supporters' Association, which represents fans in England and Wales, said: "Today we feel betrayed. Today we feel contempt for an organization that has shown its true values by giving the yellow card to players and the red card to tolerance.
"It's astonishing that on the morning of England's World Cup opener, FIFA are censoring players ... who wish to share a positive message."
However France captain Hugo Lloris -- who last week revealed he would not wear the armband -- aligned himself with FIFA.
"FIFA organizes the competition and so they set out the rules," Lloris said. "Us players just ask to play football and represent our countries on the field. I prefer to stay within those boundaries, and focus on being a player and a competitor.