The cricketer was approached in February ahead of India women’s team’s limited-overs series against England – which was part of International Cricket Council (ICC)’s World Championships.
Assistant coach Alastair Maiden will take temporary charge of the team ahead of this December's ICC Women's Championship series against Pakistan.
Taylor, who made her international debut at the age of 17, became the youngest woman to score 1,000 ODI runs, at the age of just 19.
Heading in the final T20I with an unassailable lead of 12-2 over England, Australia failed to chase down a target of 140, despite Ellyse Perry's valiant 60 not out off 50 balls.
With victory in the second T20I at Hove, Australia lead England 12-2 in the Ashes.
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Australia Women smashed England Women by 93 runs in the opening T20I.
Meg Lanning's touring team claimed an unassailable 8-2 points lead in multi-format series.
At stumps on Thursday in Taunton, Australia were looking ominous on 265/3.