The news means the Lions won't go up against one of Australia's most successful exports in two summers' time.
Williams won two Heineken Cups with Munster in 2006 and 2008, linking up with the likes of the last Lions captain Paul O'Connell in the process.
Due to his experience on this side of the equator, the former flanker cum No8 had been expected to provide important inside information on British and Irish rugby as the Wallabies look for a repeat of their 2001 series success over the Lions.
Williams joined the Wallaby set up directly from a coaching role at Thomond Park in 2008 and can claim a first Tri Nations crown in a decade among his list of achievements during his time with the ARU.
He is followed out of the Wallaby door by strength and conditioning coach Peter Harding, leaving Deans to announce a major overhaul in his back up team in the New Year.
"Both Jim and Peter have been heavily involved with the Wallabies since joining ARU in 2008 and have been a part of many great highlights," said ARU general manager of high performance David Nucifora.
"We thank them for the commitment and enthusiasm that they have shown and wish them all the best in their future endeavours."