In an unexpected development, Australia coach Robbie Deans has chosen Queensland's James Horwill to lead the 30-man squad in New Zealand.
As expected, there was no place for utility back Matt Giteau, who signalled his exclusion via Twitter, while backrower Matt Hodgson was also overlooked.
Deans picked six players who have been under injury clouds - Wycliff Palu, James Slipper, Tatafua Polotau-Nau, Rob Horne, Berrick Barnes and Drew Mitchell - and is confident all will be fit when the tournament kicks off next month.
"It is well documented that Rocky came into the Test season off a limited background in terms of preparation, having missed all but 60 minutes of Super Rugby due to injury," Deans said.
"As the incumbent captain, he warranted the opportunity to continue in the role but it has become clear that the additional responsibility has been a distraction that Rocky doesn't need."
"We all felt it was in the best interest, both of Rocky and of the team, to relieve him of the extra duties, with James's recent experience making him the best option to take over in the role."
"Ricky will stay remain a very important person within the group. He remains in the leadership group. When the proposal for the adjustments of the leadership was put to him, his immediate and impressive response was 'whatever's in the best interests of the team'," Deans added.
Horwill admitted to being shocked to receive the honour.
"It came as very much of a surprise. I feel very privileged to be given the opportunity to represent my country (and) to be announced as captain is a great honour," he said.
Elsom is one of eight Wallabies who played in the 2007 tournament where Australia were beaten in the quarter-finals.
The others are centre Adam Ashley-Cooper, fly-half Barnes, winger Mitchell, hooker Stephen Moore, number eight Palu and locks Nathan Sharpe and Dan Vickerman.
Squad members injured prior to, or during the tournament, can be replaced. All replacements are permanent however, which means covering short-term injuries had to be factored into the make-up of the squad.
"It was critical that we provided ourselves with cover for every conceivable eventuality in terms of injury," Deans said.
"Looking at every scenario imaginable, and how that impacted on the squad, and our ability to still field a combination suited to the way we want to play, was a critical part of the selection process."
"We are fortunate to boast a lot of versatility amongst our backs especially but given the tournament regulations around replacements; additional cover at halfback and hooker was non-negotiable."
Australia squad: B Alexander, A Ashley-Cooper, B Barnes, K Beale, L Burgess, Q Cooper, R Elsom, A Faingaa, S Faingaa, W Genia, S Higginbotham, R Horne, J Horwill (c), D Ioane, S Kepu, S Ma'afu, P McCabe, B McCalman, D Mitchell, S Moore, J O'Connor, W Palu, N Phipps, D Pocock, T Polota Nau, R Samo, N Sharpe, J Slipper, D Vicerkman.
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