Cycling Australia (CA) qualified seven places for the elite women's road race, but chose to select only five riders: Shara Gillow (FDJ Nouvelle Aquitaine Futuroscope), Gracie Elvin, Katrin Garfoot, Sarah Roy, and Amanda Spratt (all Orica-Scott).
New High Performance director Simon Jones said the decision not to field a full team from the third-ranked nation was based on performance and tactical decisions.
The Selection Review Panel notified CA of the decision on Wednesday, "based on determination of UCI quota spots", and in a press release CA stated that "the selectors will now reconvene and reconsider the selection decision".
Hosking is Australia's top-ranked rider in the UCI standings, and last month won a stage at the Ladies Tour of Norway. Neylan is far down the country's rankings, but won the silver medal at the 2012 World Championships.
According to a CA press release, Federation CEO Nicholas Green said that he would seek a speedy resolution to the selection for World Championships and confirmed that every athlete seeking nomination in the Australian team is entitled to seek an independent review of their non-selection in accordance with CA's policies.
The news comes after a post-Olympic Games shake-up at Cycling Australia, which withdrew its support of the Orica-Scott women's and Mitchelton-Scott under-23 men's programmes.
Team owner Gerry Ryan pledged to support the squads in addition to covering any budget shortfalls for the WorldTour men's team Orica-Scott as they search for a replacement sponsor for Orica.
CA said earlier this week that it will "focus on individual athletes, domestic development of road cycling and our role in the Australian cycling team at world championships and Olympics".
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