Dutch Prime Minister Jan Peter Balkenende said he could not support the marriage after the prince and Wisse Smit admitted that Wisse Smit had had a more involved relationship with a gangster than she had originally said.
Under Dutch law, royals who aspire to the throne must receive permission from the government and parliament to marry as the cabinet must bear responsibility for their actions.
In a letter to the prime minister made public on Friday, Prince Johan Friso said he would give up his rights to the throne for love.
“The couple had provided information that was not complete and not correct, which has harmed the confidence (of the government),” Balkenende said at a press conference on Friday.
In August, nearly two months after the couples engagement, Wisse Smit issued a statement saying she had known local mobster Klaas Bruinsma for a few months while a student, but had stopped seeing him when she learned of “the practices he engaged in.”
“This is not good for the royal family but I would not call it a crisis”
Jan Peter Balkenende,
Dutch Prime Minister
Still, last week, a bodyguard of Bruinsma, who was shot dead in a gangland killing in 1991, claimed the pair had been lovers.
In a meeting with the Dutch prime minister last week, Wisse Smit agreed that she had had a closer relationship with Bruinsma. She continued to deny any business or romantic involvement.
“This is not good for the royal family but I would not call it a crisis,” Balkenende said.
The affair, dubbed "Mabelgate", is the latest in a string of controversies that have plagued Dutch royal liaisons.
Wisse Smit, an economics and political science graduate, was also a close friend of former Bosnian foreign minister and UN ambassador Muhammad Sacirbey, who was arrested in New York in March for allegedly stealing $2.5 million from his government.
She has worked for the United Nations, George Soros's Open Society Institute and a non-governmental organisation promoting democracy and stability in the Balkans.
Soros, a wealthy philanthropist, joined ex-European commissioner Emma Bonino, former French minister and UN envoy Bernard Kouchner and eight others in signing an open letter backing Wisse Smit earlier this week.