Formula One Championship: Lewis Hamilton's world championship challenge was still alive last night when he and his McLaren-Mercedes team-mate Fernando Alonso were allowed to retain their points in the drivers' championship.

McLaren, though, were not so lucky, being fined $100 million (€720,000) and having all their points wiped from the constructors' championship at an extraordinary meeting of the FIA's world motor sport council (WMSC).

Ron Dennis, the McLaren chairman, was shellshocked by what one team insider described as "the savagery" of the penalty, and the team principal retired to the seclusion of a nearby hotel before holding a press conference.

The fine represents 20 per cent of McLaren's annual budget.

Hamilton, who leads the drivers' world championship on 92 points, three ahead of Alonso, will now be free to compete in the last four races, starting with Sunday's Belgian grand prix at Spa-Francorchamps. The Ferrari drivers Kimi Raikkonen and Felipe Massa are third and fourth.

After the espionage allegations that have convulsed the sport, the council concluded that McLaren had harnessed technical data gleaned from a 780-page technical dossier relating to the Ferrari F2007, the British team's biggest rival over the 13 races run so far this year.

By losing their leading tally of 166 constructors' championship points, McLaren have effectively relinquished the constructors' title to Ferrari, who are now almost unbeatable on 143 points, ahead of BMW Sauber on 86.

It was also made clear that McLaren would not be permitted to score any constructors' points over the remaining races this season and no McLaren representative would be allowed on the podium should a McLaren driver win one of those four races.

The FIA said it was allowing the drivers to retain their championship points "due to the exceptional circumstances in which (the governing body) gave the team's drivers an immunity in return or providing evidence".

The FIA also signalled that this verdict might not mark the end of McLaren's troubles.

"The WMSC will receive a full technical report on the 2008 McLaren car and will take a decision at its December 2007 meeting as to what sanction, if any, will be imposed on the team for the 2008 season."

The team must also prove there is no Ferrari "intellectual property" in their cars next year before racing. The full reasons for the WMSC's decision will be published by the governing body today.

Ferrari, who had been the prime movers behind getting the FIA to reinvestigate the matter after McLaren escaped without penalty at a hearing in July, issued a statement expressing their satisfaction with the verdict.

"Ferrari acknowledges the decision of the FIA to sanction Vodafone McLaren-Mercedes. In light of new evidence, facts and behaviour of an extremely serious nature and grossly prejudicial to the interests of the sport have been further demonstrated. Ferrari is satisfied that the truth has now emerged."

The council had ruled in July that McLaren were guilty of fraudulent conduct for possessing the Ferrari documents but did not punish the team because it lacked evidence that the material was misused.

However, the council had warned that McLaren might be kicked out of the 2007 and 2008 series if it were found in the future that the information has been used "to the detriment of the championship".

The FIA decision came at the end of turbulent day of discussion, thinly veiled argument and frayed tempers, with several key McLaren personnel put under huge pressure by lawyers representing the Ferrari team.

McLaren's engineering director, Paddy Lowe, was given a gruelling cross-examination.

Mike Coughlan, the suspended McLaren chief designer who was responsible for triggering the original dispute by receiving the technical data from Nigel Stepney, then a Ferrari engineer, offered profuse apologies for the problems he had caused both the teams before being taken through a detailed account of events.

The FIA president, Max Mosley, had no doubts the penalty fitted the crime. Asked if he felt that justice had been done he replied: "Yes."

• Guardian Service