Politicians and patients' groups have reacted with astonishment after the Nursing and Midwifery Council (NMC) confirmed the move, which follows a court ruling.
The NMC can now only impose suspension orders, which will have to be regularly reviewed, on midwives and nurses.
The move also means several Scottish nurses who have been struck off for incompetence in recent years could be given their jobs back.
The Scottish Conservatives described the situation as an "incredible development" that could put patient safety at risk.
The ban on striking off - which applies across the UK - follows a case at the High Court in London in which an incompetent midwife who allowed a baby to be almost strangled by its own umbilical cord had her ban overturned.
In a highly complex ruling, the judge said nurses could not be struck off for incompetence unless they had been suspended for at least two years beforehand.
Scottish Conservative health spokesman Jackson Carlaw said: "This seems like quite an incredible development, which could lead to a greater risk to patients in the future.
"It's absolutely critical the NMC has the power to strike off incompetent nurses. That is what the panel is there for, and for it to be running scared of the High Court like this is quite unacceptable."
Jean Turner, of the Scotland Patients Association, said: "This should be one of the watchdogs that should be looking out for patients. To strike someone off so they can't be a nurse again is important, if it's what's right for patients."
As a result of the case, an Aberdeen Royal Infirmary nurse who was struck off last year now faces a new hearing that could allow her back into the profession.
Nurse Ellen Agnes Murray was barred after she incorrectly told a patient he had cancer, when it was only a possibility, and brought an insect into an operating theatre. She challenged the decision at the Court of Session and the NMC will reconsider her case next month.
It appears the NMC has already switched to suspension in place of striking off. In July this year, nurse Affiong Patrick Antiah, who worked in Edinburgh's Liberton Hospital and Royal Victoria Hospital, was placed under supervision by the NMC despite the fact that more than 50 charges relating to his competence were found proved.
An NMC spokeswoman confirmed: "At the moment we can't strike people off from lack of competence cases.
"We're not entirely happy with it and we're looking to try and close that gap in our powers.
Although the NMC retains the power to repeatedly suspend nurses, critics fear it is now far more likely incompetent nurses with good lawyers will be able to get back on to wards.
The High Court ruling followed the case of Mercy Ngozi Okeke, a midwife at Queen Margaret's Hospital in Sidcup, Kent, who was struck off on competence grounds in January 2012.
In February this year, Mr Justice Leggatt ruled the decision to have her struck off was unlawful.