The three-time Grand Slam champion has not played a competitive match since Wimbledon last summer.
“Sadly I won’t be playing in Melbourne this year, as I am not yet ready to compete,” said Murray, 30, who will fly back from Australia to London and “assess all the options”.
The Australian Open starts on 15 January.
“I appreciate all the messages of support and I hope to be back playing soon,” Murray added.
In an emotional post on social media this week, Murray explained how demoralising it is to be short of fitness despite six months of painstaking rehabilitation. He stressed surgery was still something he wanted to avoid, but that it was now something he may have to consider.
Australian Open tournament director Craig Tiley said: “We are fully aware that Andy has been going through a difficult period with his hip and that he’s done everything possible to prepare for the Australian summer.
“Personally, I also know that Andy loves tennis and would do anything to play. This is a very hard decision for Andy and we totally respect it.”
Former world number one Murray has slipped to 16th in the rankings since he was beaten by America’s Sam Querrey in the Wimbledon quarter-finals last summer.
He attempted to return at the US Open in August but pulled out two days before the start of the tournament.
The Scot’s most recent match was a one-set exhibition match against Roberto Bautista Agut in Abu Dhabi last week.
He also played an exhibition match against Roger Federer in November, losing 6-3 3-6 10-6 to the 2017 Australian Open and Wimbledon champion.
Murray had hoped to make his return proper at this week’s Brisbane International tournament, but withdrew 48 hours before his first match with the American Ryan Harrison. (Courtesy BBC)