Populations of species in ecosystems are often constrained by availability of resources within their environment. In effect this means that a growth of one population, needs to be balanced by comparable reduction in populations of others. In neutral models of biodiversity all populations are assumed to change incrementally due to stochastic births and deaths of individuals. Here we propose and model another redistribution mechanism driven by abrupt and severe reduction in size of the population of a single species freeing up resources for the remaining ones. This mechanism may be relevant e.g. for communities of bacteria, with strain-specific collapses caused e.g. by invading bacteriophages, or for other ecosystems where infectious diseases play an important role. The emergent dynamics of our system is characterized by cyclic diversity waves triggered by collapses of globally dominating populations. The population diversity peaks at the beginning of each wave and exponentially decreases afterwards. Species abundances have bimodal time-aggregated distribution with the lower peak formed by populations of recently collapsed or newly introduced species while the upper peak--species that has not yet collapsed in the current wave. In most waves both upper and lower peaks are composed of several smaller peaks. This self-organized hierarchical peak structure has a long-term memory transmitted across several waves. It gives rise to a scale-free tail of the time-aggregated population distribution with a universal exponent of 1.7. We show that diversity wave dynamics is robust with respect to variations in the rules of our model such as diffusion between multiple environments, species-specific growth and extinction rates, and bet-hedging strategies.