But Sex Party registered officer and co-founder Robbie Swan said the party would "vigorously" appeal the finding, which he described as dodgy and unfair.

Since the announcement, people have flooded social media to prove they are bone fide members of the Sex Party. Dozens have posted photographs of themselves holding their membership cards, with some dubbing the AEC move "electoral dysfunction".

According to electoral rules, political parties must have more than 500 members to retain party status. Mr Swan claimed there are more than 6000 Sex Party members across the country, although he said many might not want to admit their party membership to a government official.

To calculate the number of party members, the AEC cross-checked members against a list of 550 members, finding 508 were supposedly members and on the electoral roll. Staff then phoned 26 of those members, before ruling the party no longer had 500 members.

According to the AEC, a deregistered political party can still field candidates at election, but will not be able to put the party name on ballot papers. Party funding from the public purse is also adversely affected.

"There'd be many reasons why they wouldn't want to admit to that, some people," Mr Swan said. "You know, a husband with a conservative wife, who joined up at Sexpo, or whatever.

"It's just so dodgy and it's unrepresentative and it's not fair."

Mr Swan said more than 6000 people had signed a statutory declaration since 2009 saying they wanted to be Sex Party members.

The Australian Sex Party was registered in 2009. It had its roots in the adult entertainment industry lobby group Eros Foundation.

Earlier this year, the AEC also deregistered the Australian Democrats and the Democratic Labour Party (DLP).

Mr Swan said the federal parliament needed to urgently review the way the AEC canvassed membership numbers, or small parties would be "wiped out".

"The Sex Party is also at a disadvantage in that the majority of our membership is from young people who change their addresses frequently, do not have land line phone numbers and are much more transient than established Labor, Liberal or Green members."

While the Sex Party has lost party status federally, it does not affect the status of Australian Sex Party president Fiona Patten, who is a Victorian MP, as the party is separately registered in Victoria.

Last month, the Australian Democrats - the party founded by Don Chipp in 1977 to "keep the bastards honest" - also lost party status, as did the DLP, formed in 1955 after the Labor Party split. The current version of the DLP was formed 30 years ago. Now-independent Senator John Madigan was elected as a DLP Senator in 2010, before resigning from the party last year.

According to the electoral act, political parties that are deregistered are able to appeal to the Administrative Appeals Tribunal under some circumstances.