Williams was pregnant when she won at Melbourne Park a year ago, her Open-era record 23rd Grand Slam singles title.
"It was never going to be good enough for her to just compete, she wants to give herself the best chance to win", Tiley said.
Australian Open tournament director Craig Tiley said: "The true champion Serena is has been demonstrated in the herculean efforts she has made over the past few months in her desire to play the Australian Open".
But on Friday morning the former world number one said she was withdrawing from the tournament, which starts on January 15.
Serena Williams of United States looks on during her Ladies Final match against Jelena Ostapenko of Latvia on day three of the Mubadala World Tennis Championship at International Tennis Centre Zayed Sports City on December 30, 2017 in Abu Dhabi, United Arab Emirates.
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Williams, who only returned to the sport last week since giving birth in September, said although she was super close to full form, she was not yet where she wants to be. She remained hopeful of making a return to Australia and defend her title but admitted that it's a tough task and therefore, chose to walk out. "I appreciate the support and understanding of my fans and everyone at the Australian Open", she added.
Now 36 with a growing family, will she ever be back on court at the Australian Open?
There are also fitness concerns regarding top seeds Rafael Nadal and six-time champion Novak Djokovic, although Nadal has landed in Melbourne and was seen hitting the courts. A key motivation for her is to match Court, who boasts 24 major titles and is renowned as the most successful player in Grand Slam history, but this must now wait until the French Open at the earliest.
Also in the mix will be No. 2-ranked Garbine Muguruza, last year's Wimbledon victor, U.S. Open champion Sloane Stevens and Venus Williams, who will be aiming to win her eighth major singles title at the age of 37.