Athletics Australia took the decision after Hollingsworth released a statement highly critical of champion hurdler Sally Pearson.
That wasn't the end of the drama for Team Australia, with another athlete as well as the brother of another arrested and placed in custody in separate incidents.
Correspondent: Barbara Miller
Speakers: David Grace, president of Athletics Australia; Sally Pearson, Australian hurdler
BARBARA MILLER: It was the day when a bitter rift between the captain and the coach exploded into the public arena.
Athletics head coach Eric Hollingsworth used a freelance PR agent in Glasgow to release a statement scathing of the golden girl of the track.
Hollingsworth said far from leading, Pearson has set a 'bad example to the entire national team' by failing to show up at a training camp ahead of the Glasgow Games.
David Grace is the president of Athletics Australia.
DAVID GRACE: We were very upset with his decision to go public with his comments which were released to the media today. They were unexpected.
BARBARA MILLER: Eric Hollingsworth also said in the statement that Sally Pearson had reacted badly when he asked what he called 'legitimate questions' of her performance at the World Indoor Championships last year, with the upshot that he was removed from his role as her performance advisor.
DAVID GRACE: We've known of upset between Sally Pearson and Eric Hollingsworth for some time and there's no doubt there has been and we've taken steps to ensure that the relationship is managed and that's posed no problems coming into Glasgow until these issues have been raised.
BARBARA MILLER: Sally Pearson's decision not to come to the pre-games training camp earned her a fine and as the games began last week this is what she had to say about that.
SALLY PEARSON: I have to bite my tongue a little bit today. It's a distraction and a distraction that I don't want right now. I'm focussing everything I can on what I can do to win.
BARBARA MILLER: Doing that could now be even more of a challenge now, with less than 24 hours to go before she begins her bid to retain her 100 metres hurdles title from Delhi.
DAVID GRACE: It will be sweet regardless of what's happened if she wins. She's just a magnificent athlete and we're just hoping that she will have the most vocal support from all in Australia.
BARBARA MILLER: And that isn't the end of the troubles for Team Australia by far.
The brother of boxer Jordan Samardali has been charged with aggravated assault after he reacted furiously to his brother's quarter-final defeat, according to some witnesses throwing bottles.
And in yet another incident a 29-year-old Australian athlete has been arrested and detained in connection with an altercation in the athlete's village.
It's understood he'll appear in court later today.