"It's disappointing," Pakistan Cricket Board's chief operating officer, Subhan Ahmed, told AFP.
"Initially the SLC (Sri Lankan Cricket) offered to host the series and we stopped negotiating with others."
Since Sri Lanka told Pakistan of its decision Friday, Pakistan had started negotiations with other countries about hosting the series, including the United Arab Emirates (UAE) and Malaysia, he said.
"We are looking for other venues to host Australia... and hope to finalise it soon," said Ahmed.
Pakistan is due to play five one-day and three Twenty20 matches against Australia from mid-August, the dates of which are yet to be finalised.
Since March 2009 terrorists attacks on the Sri Lankan team bus in Lahore, Pakistan has had to play its home games in neutral venues such as the UAE, England and New Zealand.
Ahmed said that playing the upcoming series in Sri Lanka after its Premier League was not an option as the country would then be preparing to host the World Twenty20, from September 18 to October 8.
Despite the development, he refused to accept Pakistan was isolated in the cricket world: "I will not accept that Pakistan is isolated, because other countries were willing to host the series."
