The SFV was threatened with expulsion from all competitions by world football's governing body FIFA if it failed to punish Sion, who were kicked out of the Europa League by UEFA earlier this season after fielding players they had signed during a transfer embargo.
FIFA told the SFV there would be a blanket ban on Swiss football if action was not taken by January 13.
Sion have now been docked three points for each of the 12 Swiss league and cup matches any one of the six ineligible players appeared in. They had been third in the Swiss top flight with 31 points prior to the sanction.
The SFV said in a statement on their official website: "The central board of the SFV has withdrawn 36 points from Super League club FC Sion. The board has therefore met the requirements of FIFA from December 17, 2011."
FIFA had demanded on December 17 that "all matches in which the relevant players participated shall be declared forfeit or three points shall be deducted respectively".
The announcement - subject to ratification from FIFA - means FC Basle will remain in the Champions League and ends any hope of a reprieve for Manchester United, who were knocked out by the Swiss side.
Sion have described the decision as a "cowardly act".
A statement released by the club read: "FC Sion was informed by the press of the decision of the Central Committee of the Swiss Football Association to bow to the blackmail of FIFA and collaborate on the injustice facing the club, by pronouncing a deduction of 36 points in the Super League championship.
"This process condemns the team irreparably to relegation. This decision is mainly an intolerable affront to equity in sports, but it is no surprise to (Sion), who did not expect any courage on the part of the SFV in the face of FIFA.
"Considering this cowardly act of the SFV, FC Sion is even more determined to defend its interests and ethics in sport of football by compliance with court decisions, both civil and sports."
The SFV said in a statement on their official website earlier: "The central board of the SFV has withdrawn 36 points from Super League club FC Sion. The board has therefore met the requirements of FIFA from December 17, 2011."
FIFA had demanded on December 17 that "all matches in which the relevant players participated shall be declared forfeit or three points shall be deducted respectively".
The announcement - subject to ratification from FIFA - means Basle will remain in the Champions League and ends any hope of a reprieve for Manchester United, who were knocked out by the Swiss side.
Sion had already been expelled from the Europa League group phase by UEFA earlier this year, with Celtic admitted in their place, a decision which was upheld by CAS earlier this month.
Earlier today it emerged Sion had lodged a "criminal complaint" against FIFA's executive committee over their ultimatum to the SFV and it now appears highly likely they will launch a legal challenge to the huge points deduction.
Their latest statement claims the SFV are in breach of their own statutes, which Sion say allow only for a maximum 12-point penalty for any misdemeanour.
They repeated their stance that they had done nothing unlawful and attached images of the six players' Swiss Football League accreditation cards to demonstrate that they had, in the club's view, been correctly and legitimately registered.
"FC Sion will make every effort to ensure that officers in charge of sports bodies respect the fundamental right of everyone to go to court without being subject to reprisals," the Sion statement continued.
The Swiss club were put under a transfer embargo in 2009 over the signing of Egyptian goalkeeper Essam El Hadary, but proceeded to sign six players in the summer.
FIFA said that an emergency committee would study the SFV documents relating to the sanction early next month.
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