Estimates of the total cost to the governing body were as high as £4m - £3m to run the independent commission and £1m for its own legal costs, sources have told Press Association Sport.
It is understood that sum would swallow up all the UCI's cash reserves and leaving the governing body needing to cover a shortfall.
UCI president Pat McQuaid announced on Monday it was disbanding the independent commission due to WADA's and the US Anti-Doping Agency's (USADA) refusal to take part in the inquiry on the basis that witnesses would not be offered an amnesty to testify.
McQuaid has also warned WADA president John Fahey that he will not allow a separate truth and reconciliation commission to bankrupt the UCI.
In an email to Fahey, McQuaid wrote: "There is still a huge amount to discuss before we can finalise a detailed legal framework for the truth and reconciliation commission, which is a process that is completely unprecedented in sport.
"In particular there is the issue of assessing the cost of and indeed how such a lengthy and expensive process should be funded.
"However, I should stress that, while I am committed to a TRC, it absolutely needs to be a process which is in the best interests of cycling and our federation - and also a process which does not bankrupt it."
Fahey had suggested that the UCI should take out a mortgage on the UCI's "extensive property in Aigle with some Swiss Bank if necessary" to come up with the necessary money.
In an emailed response this week, McQuaid dismissed that suggestion as "facetious and unhelpful".
The UCI's management committee, including British Cycling's president Brian Cookson, will discuss the fall-out from the decision to scrap the commission and its next move at a meeting in Louisville, Kentucky, on Friday.
It comes with mounting pressure on the UCI's leadership with WADA accusing them of "deceit and arrogance" for disbanding its inquiry.
The central issue of the inquiry concerned two donations by disgraced drugs cheat Armstrong to the governing body, and whether there was any complicity by the UCI in covering up his doping.
It has already been admitted that the UCI warned Armstrong of a "suspicious" blood result in 2001.
McQuaid has hit back at WADA, accusing Fahey of having a "personal vendetta" against cycling.