Female students stripped down to their underwear in front of hundreds of onlookers, while both men and women simulated sex acts with each other.
In one game, losers were required to drink urine as a forfeit, and the students also posted photographs of themselves with chocolate and pasta sauce smeared on their skin on Facebook.
The contest, nicknamed the 'Valley Rally', marked the final day of the week's holiday to the French resort of Val Thorens, for which up to 2,500 students paid at least 300 pounds each.
But when their drink-fuelled behaviour came to light, the luxury travel company, which had put up the prize, cut its links with the annual Varsity ski trip in protest.
Travel firm Scott Dunn had organised the free five-star Austrian holiday contest, which saw teams from Oxford and Cambridge performing tasks like smashing an egg "in the most creative manner possible" before eating it.
Students from St Anne's College, Oxford, whose alumni include Edwina Currie and Libby Purves, were named the winners after an egg was placed between the buttocks of one member while another smashed it with a wine bottle.
"I sold my dignity for a free holiday," the Daily Mail quoted one of those on the winning team, Sophie Hibbin, as admitting.
A spokesman for Scott Dunn said the company believed it was simply sponsoring a "fun ski race".
"Scott Dunn will be honouring the prize as per our agreement but will have no future involvement in the Varsity Trip and Valley Rally," it later added in a statement. (ANI)