The Which? Web Trader kitemark scheme run by the Consumers' Association (CA) is to close at the end of January.
The CA said its decision to bring down the shutters on its popular code of practice, set up in June 1999, was because of the "significant" costs of running it.
Paul Kitchen, head of Which? Online, said: "As a charity and campaigning organisation we need to use our resources in the most efficient way possible."
The scheme enjoyed a high profile and was seen as a benchmark for e-tailers, which agreed to meet certain basic legal and ethical requirements for consumers.
Kitchen said that it had provided a great service to consumers, and delivered a real boost for online traders. But he said it was now up to web traders to take the concept further.
"There is still a need to increase consumers' confidence about shopping online and we think it is now up to business and government to set up an alternative scheme to build on the successful work of Which? Web Trader," he said.
There has been a mixed reaction to the news from online traders. Tim Loveday, webmaster for 1stcarshop.co.uk, viewed the demise of the logo scheme with some regret.
"It did help to build consumer confidence and it would be nice to keep the logo, but if it goes so be it," he told vnunet.com.
"I don't think losing the logo will have much effect on our business."
But there is also the belief among a growing number of industry retail organisations that such logos have outlived their usefulness.
James Roper, chief executive of the Interactive Media in Retail Group, the global organisation for e-tailing, said: "It was needed four years ago when online shopping was in its infancy.
"But the internet is growing up and has moved on. Hallmarks are not the way to build confidence as consumers actually have more protection shopping online than they do on the High Street.
"Most people now know the basics of safe shopping online so we don't need a man with a red flag walking ahead of us."
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