The Badminton Association of Malaysia (BAM) had hoped Lee, who will return to action on Sunday following an eight-month ban for doping, would be given a wildcard for the Aug 10-16 event in Jakarta after seeing his ranking tumble while inactive.
The former world number one is now ranked 46th with Malaysia granted only two spots at the world championship which would normally go to their top two ranked players, Chong Wei Feng (32nd) and Zulfadli Zulkiffli (41st).
BAM, though, could yet select Lee ahead of Chong or Zulfadli but had hoped a wildcard from the BWF would save them from making the difficult choice.
The BWF gave twice Olympic champion Lin Dan a wildcard to play in the 2013 world championship in China but did not offer one to the 32-year-old Lee, who failed a dope test at last year's championship in Copenhagen.
"BWF sent us an official letter. They did not say why Chong Wei was not accorded a wildcard except that they are not exercising their right to give a wildcard to any players this year," BAM secretary Ng Chin Chai was quoted as saying by Friday's Star newspaper.
"If BWF had given the wildcard to Chong Wei, we would have three qualifiers in men's singles ... they have their own reasons."
BAM have until Thursday to name the two players to enter the men's singles draw.
(Writing by Patrick Johnston in Singapore; Editing by Amlan Chakraborty)
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