Indian cricket chiefs said they will host the League in September-October featuring the top two Twenty20 club teams from Australia, South Africa, Pakistan, England and India.
But English counties can take part only provided they do not include those players who had signed up with the Indian Cricket League, a cricket India board statement said.
"Clubs from England who qualify can play provided the teams do not include players who are with ICL," said the statement signed by BCCI secretary Niranjan Shah.
At least 25 ICL players play in English domestic cricket and only three of the 18 counties do not have any 'rebel' players.
The BCCI does not recognise the ICL, which was started last year by Zee Telefilms, India's leading listed media house, under the chairmanship of former World Cup winning captain Kapil Dev.
Indian cricket official Lalit Modi, who organised a BCCI-backed domestic Twenty20 league over the last two months, said Australia was drawing up the details of the Champions League.
A final decision on the schedule, venues and teams is expected to be announced on the sidelines of the International Cricket Council's annual meetings in Dubai from June 29-July 4.