The Socceroos have plummeted 14 places to 76th in the latest rankings released by governing body FIFA.
Australia (397 points) did not win a game in the group stage of the World Cup in Brazil, conceding three goals in each of their three matches.
Cup winners Germany are the new No.1 nation, deposing Spain who sink to eighth.
Joachim Loew’s side, fresh from their triumph in Rio de Janeiro, top the standings on 1724 points with Argentina, as World Cup runners-up, second on 1606 in the new ratings released on Thursday.
The Netherlands leap 12 places to third as a result of their third-placed finish in Brazil, while Colombia (4th) and Belgium (5th) also benefit, moving up four and six spots respectively.
World Cup hosts Brazil drop to seventh, Uruguay are sixth while Switzerland (9th) and France (10th) complete the top 10.
With England’s humiliating first-round exit, they drop 10 places to 20th (911 points), Italy (1056 points) fall five spots to 14th, while Costa Rica jump 12 spots to 16th (986).
Despite a disappointing World Cup, Japan move up a spot to become the best team in Asia at 45.