Brazil's national Olympic committee (COB) and its head Carlos Nuzman were provisionally suspended by the International Olympic Committee (IOC) on Friday, one day after the 75-year-old was arrested in Rio de Janeiro.
However, the IOC said in a statement that Brazilian athletes would not be affected and would be able to take part at next year's Winter Olympics in Pyeongchang.
Nuzman, an IOC honorary member, is accused of arranging more than $2mn in bribes to get the IOC to pick Rio de Janeiro as host of the 2016 Olympic Games and faces allegations including corruption and money-laundering.
The IOC said it had "taken note and discussed the circumstances of the allegations against and the arrest of Mr Carlos Nuzman, in particular concerning the vote for the host city of the Olympic Games by the IOC Session in 2009".
It said Nuzman would provisionally lose all the "the rights, prerogatives and functions" deriving from his IOC status and that he would be withdrawn from the coordination commission for the 2020 Olympics in Tokyo.
The COB was suspended because it was responsible for Rio's bid to stage the games, the IOC said. As a result, subsidies and payments from the IOC have been frozen.
"This decision shall not affect the Brazilian athletes," it added. "The IOC will accept a Brazilian Olympic Team in the Olympic Winter Games Pyeongchang 2018 and in all other competitions under the umbrella of the COB with all rights and obligations."
The COB in Rio de Janeiro said it did not immediately have any comment to make when contacted by Reuters.
Nelio Machado, a lawyer for Nuzman, told reporters on Thursday that the vote-buying accusations were unfounded.
Brazilian police first raided Nuzman’s home in September and accused him of paying a $2mn bribe to the son of Lamine Diack, a former IOC member from Senegal. Both Diack and his son have denied the allegations.
Marcelo Bretas, the federal judge who authorised the arrests, said Thursday that new evidence indicated that Nuzman’s role in the alleged vote-buying scheme was "more relevant” than previously thought.