Williams currently has 99 Test caps for Wales and the Lions but will now have to wait patiently to reach his century.
With Jamie Roberts nursing a wrist injury, Shanklin starts alongside Andrew Bishop in midfield, with James Hook reverting to full back in fellow Lion Lee Byrne's absence.
Lions duo Leigh Halfpenny and Ryan Jones are also out injured so Will Harries is named on the right wing and Jonathan Thomas takes over at No8.
Gatland can call on an all-Lions front row of Gethin Jenkins, Matthew Rees and Adam Jones, with Rees captaining his country for the first time.
Shane Williams and Stephen Jones join Shanklin as the only players over 30 in the Wales line up, with Blues youngster Sam Warburton starting at seven and 23-year-old Dan Lydiate chosen on the blindside flank.
Bradley Davies joins Ospreys skipper Alun Wyn Jones in the second row, with Mike Phillips going head to head with another of the game's finest scrum-halves in Will Genia.
"The front five virtually picks itself, when they're all fit and playing well," said Gatland.
"There's two young boys in the second row there who have been going really well, Bradley in particular is in great shape and we will be looking to get the ball in his hands as much as possible, he is a real player for the future.
"There was debate in the back row and we decided we wanted to have another look at Sam who hasn't played for us since South Africa in the summer, when he did very well.
"We had options on the wing as well and we thought about Chris Czekaj at full back but in the end we've gone for experience there with James Hook and that then gives us a centre combination which retains experience too.
"At scrum-half, Richie Rees has been putting pressure on Mike Phillips with some dynamic performances for the Blues so it's a big game for Mike, we are looking for him to be physical and really lead the way.
"We are still hurting as a squad from the way the Wallabies beat us last year. They were impressive as a forward pack and they repeatedly won turnover ball which gave them the game.
"It's tough times out there for everyone at the moment and those fans who have put their hands in their pockets to support Wales have made a real commitment to the cause already.
"We spoke this week about the responsibility we have to those fans now to perform."
Wales (vs Australia, Millennium Stadium, Saturday, 2.30pm)
15 James Hook
14 Will Harries
13 Tom Shanklin
12 Andrew Bishop
11 Shane Williams
10 Stephen Jones
9 Mike Phillips
1 Gethin Jenkins
2 Matthew Rees (captain)
3 Adam Jones
4 Bradley Davies
5 Alun Wyn Jones
6 Dan Lydiate
7 Sam Warburton
8 Jonathan Thomas
16 Huw Bennett
17 Paul James
18 Deiniol Jones
19 Martyn Williams
20 Richie Rees
21 Dan Biggar
22 Chris Czekaj
NB bold denotes Lion