Tickets to the concert, which will be held on July 2, were allocated in an SMS lottery and were free, however soon started appearing for sale on eBay for hundreds of dollars.
The concert aims to raise awareness of African poverty.
Pop star Bob Geldof, who organised the concert, labelled the site an “electronic pimp” and urged people to swamp it with bogus offers of tickets or massively inflated bids.
“What I would ask you to do tonight is to get on eBay and mess up the system,” he told Sky News.
“Everyone should go on and pretend they have got tickets for Live 8 … otherwise go on and bid ridiculous amounts of money for the tickets already on the site,” said the feisty Irish rocker.
Within minutes of his statement, bids surged from hundreds to millions of pounds.
“It is completely against the interests of the poor,” he told the Daily Mirror newspaper.
“The people who are selling [tickets] are wretches.”
The British arm of eBay initially rejected Geldof’s call to end the sale, saying there is nothing illegal about it, however would donate the fees received from any Live 8 ticket sales to charity.
The organisation later capitulated and announced it would ban the sales.
“eBay has decided to not allow the resale of Live 8 tickets on the site,” a spokesman told Reuters.
“We have listened to eBay’s community of users and the message has been clear – that they do not want the tickets to be sold on the site. Once we are made aware of any Live 8 tickets being resold they will be taken down,” he added.
Geldof organised the July 2 concert 20 years after his Live Aid sensation which raised money to help the starving in Ethiopia.
Rather than raise money, the 2005 concert aims to raise the profile of African poverty and influence leaders of the G8 group of industrialised nations who meet in Scotland next month.
Four other concerts will be held in Paris, Rome, Berlin and Philadelphia on the same day and a sixth on July 6 in Edinburgh – the day the two-day G8 summit starts in nearby Gleneagles.
More than two million text messages were sent by people hoping to get tickets in the draw.
Performers for the London concert include a reformed Pink Floyd, U2, Paul McCartney, Coldplay, Madonna and REM.