The Dutch-owned firm suspended deliveries last month after losing funding.
It had been delivering about 3m letters every week in the three cities, in direct competition with Royal Mail.
The private equity arm of Lloyds bank decided not to invest, triggering a review.
Parent group PostNL said the firm had begun a consultation with affected staff "to minimise the impact of the decision".
The company also pointed out it would continue to collect 80m items a week to be fed into the Royal Mail system for final delivery.
A statement released by PostNL said: "Following the termination of the discussions on the proposed investment in Whistl UK to fund the further rollout of its current end-to-end (E2E) activities, we have assessed alternative scenarios for Whistl's E2E operations.
"Further to this assessment, it has been decided to end Whistl's E2E operations.
"Whistl remains committed to further developing its successful activities in the UK, including downstream access (DSA) service, door-drop media, packets and parcels and logistics."
About 1,800 workers were employed by Whistl, with many on zero-hours contracts.
Whistl is the second largest postal operator in the UK.

13 November 2015 Last updated at 00:05 GMT
Released in 1996, the browser plug-in enabled animations, interactivity and streaming video on what was a largely static web.
But the software has been plagued by security problems, and has been criticised for affecting computer performance and battery life.
Now many experts say the media plug-in's days are numbered. Watch the video to find out more.
Postal business Whistl has confirmed it is ending its home delivery service in London, Liverpool and Manchester, putting up to 1,800 jobs at risk.
[NEXT_CONCEPT]
A few years ago, it was difficult to browse the web without coming across a site using Flash.