Australian Olympic officials said on Monday "it was clear" the Tokyo Games could not go ahead as scheduled this year and told its athletes to instead prepare for the event in 2021.
The International Olympic Committee (IOC) shifted its tone on the Games overnight as the coronavirus crisis spirals, saying it would step up planning for different scenarios, including postponement.
In response, the Australian Olympic Committee (AOC) convened a board meeting on Monday and unanimously decided a Games starting in July was not possible given the uncertainty around the pandemic.
"It's clear the Games can't be held in July," Australian chef de mission Ian Chesterman said.
"Our athletes have been magnificent in their positive attitude to training and preparing, but the stress and uncertainty has been extremely challenging for them."
AOC chief executive Matt Carroll said athletes needed certainty, and they must also prioritise their health and that of their families.
The board meeting decided an Australian team "could not be assembled in the changing circumstances at home and abroad" and they should now plan for an Olympics in the northern hemisphere summer next year.
"We have athletes based overseas, training at central locations around Australia as teams and managing their own programmes. With travel and other restrictions this becomes an untenable situation," he said.
"The IOC had adopted the key principles of putting athlete health first and ensuring it acted in their best interests and the interests of sport. This decision reflects those principles.
"We are now in a position where we can plan with greater certainty."
Swimming Australia chief executive Leigh Russell supported the decision.
"Given the current situation worldwide, it has become evident that it is not safe for the Games to be staged in its current time frame," he said.
"Although it's a devastating prospect for the Games to be postponed, it is the correct decision, as we must focus on our families and our communities at this challenging time."
Chesterman said postponing the Games until next year "will allow athletes from around the world to properly prepare with the hope the coronavirus crisis will be under control".
"We are aware that for many such a postponement will present a range of new issues. But when the world does come together at the Tokyo Olympic Games they can be a true celebration of sport and humanity," he said.