The decision to annul the deal was taken at a meeting of the Cabinet Committee on Security (CCS) chaired by Prime Minister Manmohan Singh on the basis of a recommendation from the Space Commission.
The annulment comes in the wake of a raging controversy over the deal for handing over 70 Mhz of S-Band spectrum to the private firm for Rs 1,000 crore on which the CAG has already initiated action.
According to certain estimates, this deal may have resulted in a loss of Rs two lakh crore to the exchequer.
After news reports about the possible revenue loss appeared, the Government and ISRO said the project was already under review and action has been initiated for termination of the contract.
The Prime Minister said yesterday that the deal had never been operationalised and rejected suggestions that his office had held "backroom" talks with Devas after the Space Commission's decision to scrap the deal.
He had said that if there has been delay in scrapping the deal, this has been "only procedural."
Devas Multimedia had yesterday termed as "disturbing and inappropriate" the government's "unilateral" decision to terminate the agreement and threatened to take legal action.
It said the government had reached the decision "without due investigative process and without following the principles of natural justice."