Chinese and British women improved the team's sprint world record three times in the space of an hour on Thursday, in the opening race of the six-day competition.
Gong Jinjie and Guo Shuang beat the record twice, in the qualifying then in the first round.
Victoria Pendleton and Jessica Varnish of Britain were the first to improve on the previous mark of 32.549 set by Germany in April at the world championships, clocking 32.526 seconds over the two laps of the Velodrome in qualifying.
Their performance ignited loud applause and whistles in the stands packed with fans holding Union Jacks, but the British fans were quickly silenced by the Chinese pairing of Gong Jinjie and Guo Shuang.
The Chinese produced an even faster effort on the track made of Siberian pine wood to establish a world record of 32.447 seconds. They then posted another record of 32.422 to qualify for the final.
Varnish and Pendleton then saw their medal hopes vanish when they were relegated for making an early change in the first round.
During the two-lap race, the leadoff rider is required to give way to the second rider at a certain point on the track. British cycling officials could be seen conferring with judges at the London Velodrome, and performance director Dave Brailsford was seen shaking his head.
The crowd of 6,000 fans booed when it was announced the British team had been relegated.
The British pair had set the second fastest time and would have been facing the Chinese in the final. Germany was promoted to the final while Australia was to take on Ukraine in the match for the bronze medal.
The team sprint is the most explosive event of the Olympic track program. The women's competition has been introduced this year.
Unlike the team pursuit, where riders have to ride in a perfect line, the sprint is all about speed and power. Each rider completes a lap at the front as fast as possible, and medals can be won or lost in a thousand of a second.
At the Olympics, each nation sets a qualifying time to decide the fastest teams. The top eight nations ride against each other in the first round with the fastest two teams reaching the final and the slower two competing for the bronze medal.
The women's world record had already been broken twice in the London Velodrome at a World Cup event in February before Kristina Vogel and Miriam Welte reclaimed it at the worlds championships in Melbourne, Australia.
Pendleton will retire after the London Games and was bidding to add new medals to the Olympic sprint title she won in Beijing. She also plans to compete in the keirin and the individual sprint in London.
Pendleton won the sprint at the worlds after defeating archrival Anna Meares of Australia in the semifinals.
Meares is also competing in the team sprint with Kaarle McCulloch.
The records continued to tumble in the men's team sprint qualifying.
China set a new Olympic mark of 43.751 seconds in the first heat to successfully go off, only to watch five-time world champion France lower the time to 43.097. Reigning Olympic champion Britain with new leadoff man Philip Hindes then did even better, clocking 43.065 seconds to qualify first.
The men's team pursuit qualifying is also taking place on Thursday.
AP Sports Writer Dave Skretta contributed to this report