Williams travelled with the party to South Africa but was told the news on the team's arrival.
Blues chief executive Andy Dalton said in a statement: "On several occasions (Williams') behaviour has been deemed inappropriate within team conduct and protocol and on at least four occasions Williams has been addressed by either coach David Nucifora and manager Ant Strachan or the leadership group on behalf of the team.
"Examples of these indiscretions include disrespectful behaviour within the team, issues around promotions and sponsorship commitments and a number of late-night drinking incidents which contravened team protocol.
"We will meet with him on his return to New Zealand and will investigate whether or not we need to be addressing this matter under the player's contract and decide where we go from here."
Williams' place in the squad has been taken by Anthony Boric.