The decision has forced officials to piece together a Tri-Nations tournament featuring Australia, New Zealand and Argentina, with all four governing bodies set to cop a massive financial blow worth millions.

The tournament will launch with a showdown between the Wallabies and All Blacks at Sydney Olympic Park on October 31. The host nation will close the series against Argentina at Western Sydney Stadium on December 5.

South African Rugby Union boss Jurie Roux says the impact of the COVID-19 pandemic has left the reigning world champions underdone, citing player welfare as a major concern.

"SANZAAR and Rugby Australia have bent over backwards to make the tournament happen and it would have been unfair on them and their partners and state government to delay a decision any longer," Roux said.

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"This is a hugely disappointing outcome for supporters and commercial partners but the ongoing impacts of the pandemic in multiple dispensations mean we are unable to deliver a Springbok team without seriously compromising player welfare, apart from other logistical challenges."

The South African government granted the Springboks approval to fly to Australia almost three weeks ago but rugby staff were adamant players needed 500 minutes of match play under their belts before launching an international campaign.

The decision will have a major impact on each nation's bottom line, but the South Africans are relying on a British and Irish Lions tour next year to prop them up.

The withdrawal further strains what was once one of world rugby's strongest partnerships between Australia, New Zealand and South Africa.

South African clubs are already preparing to walk away from Super Rugby and play domestic football in Europe, with officials firing a parting shot at their Kiwi counterparts on their way out the door.

Wallabies coach Dave Rennie is disappointed with the Springboks' exit, which slices a planned 12-game tournament to six matches.

"Disappointing isn't it? It would have been a hell of a tournament in Australia with some of the best teams in the world going head to head," Rennie said.

"Obviously it's less games and less opportunity for some of our young guys to get a taste of Springbok footy. Again we're going to have to make changes and adjust.

"We're fortunate enough to be playing some Test footy at the moment and the Argentinians have arrived in Australia.

"We're going to organise a couple of teams for them to play against, so they'll get a couple of hit-outs before the Test matches start proper for them."

SANZAAR chief executive Andy Marinos says it is "extremely disappointing" the Springboks have pulled out of the four-nations tournament.

"SANZAR recognises the challenges and adversity that the national unions have had to face this year due to the pandemic," Marinos said.

"It is a tribute to the Unions in how they have been able to adapt and, dependent on COVID restrictions, run domestic competitions with the exception of Argentina who has been impacted the hardest through their lockdown.

"These short domestic tournaments, and in Argentina's case no domestic competition, are not the normal lead into an international window, and while it has been a far from ideal preparation we look forward to an exciting and vibrant Tri-Nations tournament."

TRI-NATIONS FIXTURE

Match one: Saturday October 31 - Australia v New Zealand at Sydney Olympic Park.

Match two: Saturday November 7 - Australia v New Zealand at Lang Park.

Match three: Saturday November 14 - New Zealand v Argentina at Western Sydney Stadium.

Match four: Saturday November 21 - Australia v Argentina at Newcastle Stadium.

Match five: Saturday November 28 - Argentina v New Zealand at Newcastle Stadium.

Match six: Saturday December 5 - Australia v Argentina at Western Sydney Stadium.