The AQE has apologised for "the distress caused" after cancelling the transfer test for P7 pupils which had been rescheduled for February 27.
The single test was scheduled after the three tests due to take place in January were called off.
In categorically stating that there would be no test in this academic year, Dr Darrin Barr, joint CEO of AQE, said "every possible avenue" had been explored to allow pupils to sit the test this year.
"The Chief Medical Officer's words on Tuesday night were very concerning about the prospect of further extended lockdowns and home learning beyond February," said Dr Barr.
"The Board of the AQE agreed unanimously that to end uncertainty for children we would cancel the test.
"I'd like to apologise for the way we handled the announcement last week.
"I realise that caused distress to children, and six hours later announcing we would hold a test on February 27."
In a statement the AQE said it was cancelling the test "due to the ongoing uncertainty about the potential for an extended period of lockdown".
Education Minister Peter Weir said the cancellation will "severely limit" parental choice.
"I am disappointed that AQE will not be operating a test this year on the grounds of public health," he said.
"This will also be very disappointing for many pupils and parents. This decision by AQE makes it an impossibility for any such test to happen. It is clear that public health and the wider Covid-19 situation has prevented the transfer test taking place this year.
"Today's announcement diminishes that choice significantly," he added. "In view of the ongoing public health situation, I had recommended to Boards of Governors that they should prepare contingency criteria in the event the transfer tests did not go ahead.
"These criteria should be finalised soon by schools and will be published by the Education Authority on February 2. However, in light of the changes today, we are extending the date for schools to submit final admissions criteria to the Education Authority, until January 22. My officials will issue further correspondence to schools."
"The health and safety of the children due to sit the exams is our top priority.
"We will be writing to parents individually over the coming days to confirm these arrangements. We wish to thank the Minister for Education, his officials and the Education Authority for their support".
Dr Graham Gault, president of the NAHT said it was "not a happy day".
"Many of our Year 7 children have simply been failed," he told the Belfast Telegraph. "There has been nine months to develop a plan B for exactly this eventuality. Nothing has been done."
Children's Commissioner Koulla Yiasouma said the right decision had been reached.
"It is unfortunate that we are in this situation," she added. "I called for discussions on alternative arrangements to begin last spring. It is disgraceful they did not. It expect relevant authorities to work to make sure there is confidence in the transfer procedure for all children."