Australia axe captain Neill from World Cup squad
Australia captain Lucas Neill (C) pictured during a training session in Sydney on November 18, 2013 - by Saeed Khan
The decision appears to spell the end of the 36-year-old's international career after 96 games for his country, although Neill has previously said he was determined to play in January's Asian Cup tournament in Australia.
Postecoglou said the decision not to select him in his provisional 30-man squad for the World Cup was not easy, adding he wasn't convinced the defender could cope with the rigours of football's showpiece event.
"He was obviously very disappointed," said Postecoglou, who informed Neill of his axing a week ahead of officially announcing his squad out of respect for the player.
"It was difficult. He has worked damn hard to try and get himself ready and available. He has shown an enormous determination to go to this World Cup.
"I just had to make a decision not so much about the recent history, but the last six months," he added.
"In terms of form and fitness, there just wasn't enough evidence there for me to say that he would be able to hold up in the World Cup."
Either Crystal Palace midfielder Mile Jedinak or former Everton stalwart Tim Cahill are favoured to be named captain for the World Cup next month. Australia have Spain, the Netherlands and Chile in their group.
Neill, who made his international debut in 1996, has led Australia 60 times but has struggled for game time since a stint in Japan ended last November.
He finally signed with English championship team Watford in February before a loan move to Doncaster Rovers.
"He was probably a little bit unlucky in a couple of the moves he made ... if post-Christmas, from January onwards, if he'd had four months of football under his belt I guess a different decision would have been made," Postecoglou said.
"It's not easy. He has shown outstanding determination and it's a credit to him, you can see why he has played for his country as many times as he has and why he was a leader."
Since Postecoglou was appointed coach following the sacking of German Holger Osieck last October, many of the veterans from Australia's 2010 World Cup campaign have called it quits, including Mark Schwarzer, Harry Kewell and Brett Emerton.
MORE REGIONAL NEWS
Latest Photo Galleries on xinmsn
Prime Minister David Cameron says Britain was ready to "take whatever steps are necessary" to destroy Islamic State militants after they mur... More Prime Minister David Cameron says Britain was ready to "take whatever steps are necessary" to destroy Islamic State militants after they murdered a British aid worker. Duration: 01:20
Date 11 hrs ago, Duration 1:19, Views 154