The end of Finch's 17-month tenure as captain will be confirmed when Australia release their 15-man squad for next month's tournament. Steve Smith will step up as captain in the only format he was not yet in charge, having succeeded Michael Clarke in Tests and one-dayers at the end of last year's Ashes series.

Smith was not handed the Twenty20 captaincy last year when he officially succeeded Clarke as Cricket Australia did not want to overburden him, however the smooth transition he has made to the top job has convinced decision-makers he is ready.

Finch has been training daily at the MCG as part of his rehabilitation from a hamstring injury he suffered in what will be his last match as Twenty20 captain, on January 29 at the MCG. He is on track to be ready to resume playing well before Australia's Twenty20 series in South Africa in early in March.

CA declined to comment on any aspect of the composition of Australia's squad for the World Twenty20, to be held in India.

It had been reported the move to oust Finch was due to his injury, however selectors were set to drop him from the one-day international side for the fifth game against India. The situation changed, however, when Finch made a century in game four and Glenn Maxwell was injured.

There have been discussions behind the scenes for some weeks on the option on replacing Finch with Smith.

The stunning form of Usman Khawaja and Shane Watson as top-order candidates to partner David Warner has also fed speculation over the position of Finch, despite him being ranked as the world's top Twenty20 batsman until the recent series against India.

Given none of Australia's selectors are in Melbourne it is unclear how news of the change in captain has been conveyed to Finch. It is also unclear whether the 29-year-old will be retained in Australia's squad, under new captain Smith, for the three matches in South Africa and also the World Twenty20.

The sparse scheduling of Twenty20 Internationals meant Finch led Australia in just six matches during that period, winning three. He missed two matches due to injury, the last against India at the SCG when Shane Watson deputised for him.

Chief selector Rod Marsh was last month asked about the situation of having Smith captaining in only two of the three formats but playing all three. He did not rule out a change, but praised Finch's role at the helm of the Twenty20 team.

"Those things are always considered, but at the moment Aaron is doing the job and doing it nicely," Marsh said.

Since those comments, Finch top-scored in the two matches of the India series he managed before injury, with his 44 in Adelaide and 74 in Melbourne contributing 41 per cent of the runs scored by Australian batsmen in those matches.

Finch held the ICC's top ranking in Twenty20 until that series, when he was overtaken by India's Virat Kohli.

Finch was appointed Twenty20 captain in September 2014, after George Bailey resigned to prioritise regaining his position in Australia's Test team. At that time Clarke, who had retired from the shortest format, was captain of the Test and one-day teams.

In appointing Finch, Marsh said the Victorian had been charged with "building consistent performances as they head towards the ICC World Twenty20 in 2016".

While the opening partnership between Warner and Finch is widely considered to be among the best, if not the best, in international cricket, Warner only twice partnered Finch during his stint as captain.

Watson recently bemoaned the lack of continuity for selection for Australia's Twenty20 team, believing it was hindering their performance.

"No doubt that's the biggest challenge for the Australian Twenty20 team - and always has been, when I've been a part of it - is until the Twenty20 world cup the priority for the best players playing all the time is not always there, because there's so much cricket that is on . . . you've just got to manage your best players as well as you can, which always means there's no continuity with Twenty20 teams up until a game or two before the Twenty20 world cup. That's happened in every Twenty20 world cup I've been a part of, which does make it challenging, there's no doubt," Watson said during the India series.

"When you play in a BBL team or IPL team you just about know your best team ... everyone knows their specific roles, and are consistently doing them throughout a whole season. But when there's only a few Twenty20s here and there, throughout a long summer, it provides a huge challenge to be able to get your best players playing in their best positions."

Finch has become the second Victorian to be axed as Twenty20 captain in a World Twenty20 year. Cameron White held the role for a year until he was replaced by Bailey in early 2012.

- Jesse Hogan, Andrew Wu