The Edinburgh skipper was named co-captain of his country by new Scotland coach Andy Robinson but will not feature against the Wallabies at Murrayfield.
Blair had been due to start among the replacements for the second week running but he failed a fitness test on an ankle injury he picked up during last week's 23-10 win over Fiji.
The 28-year-old was carried from the pitch less than a quarter-of-an-hour after coming on as a 63rd-minute replacement against the Fijians and hasn't recovered in time for the second of Scotland's three autumn internationals.
Blair did take some part in training this week despite missing Monday and Tuesday's sessions and his absence will come as a blow to 2001 Lions coach Robinson as he prepares for his second game in charge.
It is not known whether Blair, who replaced Ireland's Tomas O'Leary in the 2009 Lions squad prior to departure for South Africa, will recover in time for Scotland's final international of the year against Argentina on November 28.
Blair has been replaced in the Scotland matchday 22 by Gloucester's Rory Lawson, who is now in line to win his 16th Test cap.
Lawson's promotion means Blair's Edinburgh colleague Greig Laidlaw will start Scotland A's match against Tonga at Netherdale this Friday, with Glasgow's Mark McMillan added to the Scotland A bench.