Cricket Australia, which named fast bowler Pat Cummins as Paine's replacement on Friday, said Paine advised them he would be 'stepping away from cricket for a period of time'.
Former skipper Steve Smith returns from leadership wilderness to become the team's vice-captain.
Ricky Ponting earlier said that Paine's inclusion in the team would 'inevitably' be a distraction and the drama was 'not going to go away'.
Smith has now emerged as one of the candidates for the captaincy role after Tim Paine stepped down from the role over the 'sexting' scandal.
George Bailey shares a personal and business relationship with Tim Paine, who steps down as Australia Test captain after embroiling in a sexting scandal.
The Australian Cricketers' Association on Friday said it was 'saddened' that the wicketkeeper 'felt the need to resign' as the team's Test captain.
Reports claimed a Cricket Tasmania employee was offended by 'Mr Paine's sexually explicit, unwelcome and unsolicited photograph of his genitals in addition to the graphic sexual comments'.
Aaron Finch backing opener David Warner through his bad patch was perhaps the Australian limited-overs captain's masterstroke at the ICC T20 World Cup.
Big-hitting all-rounder and Australian cricket's man of the moment Mitchell Marsh has thanked the country's selectors for giving him an "amazing six weeks" at the T20 World Cup by promoting him to the top-order.
Runners-up New Zealand were given Rs 6 crore while both the semi-finalists -- England and Pakistan -- bagged an amount of Rs 3 crore each.
A clinical unbeaten knock from Mitchell Marsh (77 not out off 50 balls) along with a crucial half-century by David Warner (53 off 38 balls) and a superlative spell by Josh Hazlewood (3/16) powered Australia to win their first Men's T20 World Cup trophy, defeating New Zealand by eight wickets in the final at the Dubai International Stadium here on Sunday. Facing a target of 173, the biggest chase in a Men's T20 World Cup final, Australia reached home with seven balls to spare.
Former Sri Lanka captain Mahela Jayawardene had his say on who will win the final of the ICC Men's T20 World Cup. He said that his mind is with Australia but his heart thinks New Zealand will win the final. Both Australia and New Zealand are aiming to clinch their first-ever Men's T20 World Cup trophy at the Dubai International Stadium.
Former South Africa captain and all-rounder Shaun Pollock believe that it will be a fairytale ride if New Zealand wins the ICC T20 World Cup final against Australia.
Australia's limited-overs skipper Aaron Finch feels there is a potential for Matthew Wade to come higher up in the order as early as in the ICC T20 World Cup final against New Zealand.
The New Zealand captain says they can't take anything for granted as Australia are a team full of match-winners and world-class cricketers.
Wade was on 21 from 13 balls when Ali dropped his catch at cow corner on the bowling Shaheen Afridi. The left-hand batsman went on to score 41 runs in 17 balls with three back to back sixes in the 19th over.
Following Australia's come-from-behind win over Pakistan to reach T20 World Cup final, team's captain Aaron Finch said it was a great game of cricket and credited match-winner Matthew Wade (41 not out of 17 balls) for holding on to his nerve to provide an amazing end.
Chasing, David Warner made 49, while Matthew Wade smashed a 17-ball unbeaten 41 and Marcus Stoinis was not out on 40 off 31 deliveries as Australia overhauled the target with an over to spare.
Ben Stokes joined the England squad for a training session for the first time after his six-month lay off from cricket at the Metrico stadium in the Gold Coast in Queensland, Australia.
Pakistan batters Mohammad Rizwan and Shoaib Malik are suffering from "mild flu" and they could be doubtful starters for the T20 World Cup semifinal against Australia.
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