The wicketkeeper had been set to feature for Australia in the first Test on December 8.
Cricket Tasmania confirmed the decision on Thursday night ahead of their Marsh One-Day Cup match with Western Australia
The 36-year-old had been due to take part in the fixture, which would have been his first competitively since he stepped down from his role as Australia captain on Friday following revelations about a sexting scandal.
“Following discussions over the last 24 horas, Tim Paine has advised Cricket Tasmania that he will be taking a leave of absence from all forms of cricket for the foreseeable future,” a statement from Cricket Tasmania read.
“Tim’s decision makes him unavailable for selection for today’s Marsh One-Day Cup match against Western Australia. His place in the squad will be taken by Charlie Wakim.
“Cricket Tasmania will continue to support Tim and his family both professionally and personally over the summer.”
Paine had been confirmed as skipper of Australia’s 15-strong squad last week before he gave a press conference in Hobart on Friday, admitting “a private text exchange” with a former colleague at Cricket Tasmania.
The matter was investigated by Cricket Australia over three years ago, with the wicketkeeper found not to have breached the organisation’s code of conduct but he concluded his past conduct did “not meet the standard of an Australian cricket captain or the wider community.”
James Henderson, managing director at sports agency DSEG, said of his client on Twitter: “Confirming that Tim Paine is stepping away from cricket for an indefinite mental health break.
“We are extremely concerned for his and Bonnie’s well-being and will be making no further comment at this time.”
Cricket Australia chief executive Nick Hockley said in a statement: “We recognise that this is an incredibly difficult time for Tim and his family and are committed to supporting them. We respect and understand Tim’s decision to have a break at this time to focus on his and his family’s well-being.”
“The National Selection Panel will meet in the coming days to discuss the final squad ahead of the first Ashes Test on December 8.”