The change has been approved by Tessa Jowell, the secretary of state for culture, media and sport, as part of an effort to help BBC Three channel increase impact and value for money.
The decision follows publication of the Barwise Report last autumn and the BBC's own audience research, which was undertaken earlier this year and showed the bulletin was not value for money.
In his review of the BBC's digital television channels last year, Professor Barwise recommended that BBC Three discontinue its '7 O'Clock News', adding that the 25- to 34-year-old audience was being well served by the 60-second hourly news programme, which will remain.
The BBC's own research found that while the '7 O'Clock News' bulletin has been innovative, it had not succeeded in attracting and holding its target audience and was therefore not seen as representing value for money.
Jana Bennett, director of BBC Television, said: "We have taken this difficult decision because we know that the audience's news needs are being met in other ways. As part of this plan, we will increase our commitment to new knowledge-building programmes from a minimum of 45 to 50 hours a year."
Stuart Murphy, the departing controller of BBC Three, added: "BBC Three's '7 O'Clock News' was created in an era of intense competition from seven rolling news channels and 24/7 news on the internet.
"It has fought its corner with innovation and style and I genuinely regret that the programme's audience impact was not significant enough to justify its existence."
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