FIFA has banned international games from being played at venues more than 2,500 metres above sea level.
FIFA president Sepp Blatter said the decision was taken on Sunday after a review by the medical team for world soccer's governing body.
Bolivia has held World Cup qualifiers at an altitude of about 3,600 meters (11,810 feet) at its capital La Paz. There has been criticism that Bolivia's advantage is not only unfair, but also dangerous for the players' health.
Earlier this year, Brazilian club Flamengo said they would not play again at altitude after several of their players needed oxygen during a game staged at nearly 4,000 meters (13,120 feet) against Bolivian team Real Potosi.
Peru also has stadiums above 3,000 meters.
Speaking after a meeting of FIFA's executive committee, Blatter also reiterated his full support in South Africa's ability to hold the 2010 World Cup.
"I was fighting to bring the World Cup to Africa. Now, I am not fighting, I am confident we are doing it," he said.
Blatter noted that the same objections arose from European and Latin American nations when the United States held the World Cup in 1994.
"People said that Americans didn't know what football was, but we taught them. This is not the first time we have organized a World Cup," Blatter said.
Six South African government ministers will meet with Blatter and other top FIFA officials on Wednesday, ahead of the FIFA World Congress being held Wednesday and Thursday in Zurich.