The 114-year-old second tier club, based on England's south coast, were docked 10 points for going into administration. That means they dropped from 18th to 21st in the 24-team standings, just above the relegation zone.
Portsmouth, who won the 2008 FA Cup - their first major honour for 58 years - were relegated from the Premier League in 2010 and were docked nine points for going into administration for the first time in March 2010.
Pompey's application to go into administration was approved by High Court Judge Mr Justice Norris who appointed Trevor Birch, former chief executive of Chelsea and Leeds United, as administrator.
The hearing was told the club owed around two million pounds to business creditors and around two million to the tax authorities (HMRC).
HMRC won the right to have Birch appointed over Andrew Andronikou, the administrator of Portsmouth's parent company who was the club's preferred choice.
"I'm used to dealing with clubs in crisis," Birch told Sky Sports News.
"You could say most of the Championship is in crisis - 30 percent of the clubs are paying wages in excess of 100 percent of turnover. That in itself tells a story."
"The intention is to try to sell the club as a going concern. Hitherto there has always been somebody to come out of the woodwork to buy football clubs. Maybe this appointment might be the impetus for somebody new to make a bid," Birch added.
"The most important thing now is to try to achieve some stability and put the club on an even keel."
Utility companies were threatening to cut off gas and electricity at Portsmouth's Fratton Park home, the court heard.
They are the second major British football club to enter administration this week following Scottish champions Rangers on Tuesday.
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