Following a scandal surrounding allegations of sexual assault by Jean-Claude Arnault, the husband of former Swedish Academy member Katarina Frostenson, the academy has chose to postpone the award ceremony.
The academy said it would name the 2018 laureate "in parallel with the naming of the 2019 laureate".
The Academy said the decision was made "in view of the now diminished Academy and the reduced public confidence in the Academy".
The Swedish Academy said the decision was arrived at in view of "the reduced public confidence" in the institution.
Six members of the group have resigned in recent weeks, including Katarina Frostenson, Arnault's wife. In a statement emailed to CNN earlier this week, Arnault's lawyer, Bjorn Hurtig, said his client denied all the allegations.
Some events were said to have occurred at academy-owned properties in Stockholm and Paris, and at least one woman's complaints to the academy about Arnault more than 20 years ago were rebuffed.
The foundation has faced further criticism for providing funding to a cultural centre headed by Arnault and Frostenson in an apparent breach of conflict of interest regulations.
What followed was a wave of resignations, including Ms Frostenson and the head of the academy, Prof Sara Danius.
This week, King Carl XVI Gustaf revised the Swedish Academy's rules to allow members resign.
Fans and critics will have to wait for another year to get a new Nobel Laureate in literature. That is why it is so important that the Academy now works tirelessly to restore confidence.
This would be the first time since 1949 that the Academy did not name a laureate, which has happened seven prior times: 1915, 1919, 1925, 1926, 1927, 1936 and 1949.
On May 4, the Stockholm-based organization that hands out the prize said its 2018 victor will be announced next year along with the 2019 victor.
The Swedish Academy that selects the Nobel Literature Prize laureate has been plunged into crisis since November, in the wake of the global #MeToo campaign against sexual harassment.
Publisher Svante Weyler said the postponement could prove "to be a risk", as the academy could be seen as having "disqualified" itself as a jury.
This decision has been made in the light of the ongoing crisis in the organisation.
The Nobel Foundation, which administers the estate of dynamite inventor Alfred Nobel, said in a statement that the academy's decision "will help safeguard the long-term reputation of the Nobel Prize".
Anders Olsson, the acting permanent secretary of the Swedish Academy, announces that the Swedish Academy postpones the award of 2018 Nobel literature prize, during an interview to the Swedish newsagency TT News Agency, in Stockholm, Sweden. This time, it is the Nobel Prize in Literature, which has been postponed for the first time since the Second World War because of a sexual assault scandal. It underlined that the other Nobel awards were not affected.
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