Australian captain Steve Smith is ruled out of the Twenty20 series against India due to a shoulder injury, a massive setback for the already struggling visitors.

Cricket Australia confirms that vice-captain David Warner will stand in as captain for the three-match series, which begins today.

Marcus Stoinis will replace Smith in the squad for the remainder of the series. Smith, on the other hand, will return home and is expected to be fit for next month's Ashes.

"Smith landed awkwardly on his right shoulder while diving in the field during the fifth ODI against India last Sunday," team doctor Richard Saw stated in a Cricket Australia release.

Australia lost the fifth ODI in Nagpur by seven wickets as India completed a 4-1 series win over the world champions to reclaim the number one spot in the ICC rankings.

"Following the match he complained of shoulder soreness, which has not settled and is restricting his ability to bat and throw," Cricket Australia stated.

"Subsequently he has had an MRI scan which has excluded serious injury, but we believe the best course of action is for him to not continue to aggravate his shoulder and allow it to recover."