The 32-year-old batsman, who has also captained the Australian one-day side this week in Zimbabwe in the absence of injured skipper Michael Clarke, said he struggled with the transition between the different formats of the game.
“It took a lot of thought and a lot of time,” he told Cricket Australia’s website.
“I had a good think about what I wanted to do in the next four years and I’m really passionate about playing the best four-day and one-day cricket that I can.
“I guess the very end goal is to play test cricket, but more than that it’s just about playing the best four-day cricket I can.
“It’s the format I find the most challenging and the format that I get the most enjoyment from – it’s where my real passion lies.
“Whether concentrating on that ends up in me getting back into the test squad, it doesn’t worry me too much.”
Bailey made his ODI debut in 2012 but he really came to prominence when he stood in as captain for the injured Clarke on the tour of India last year.
That ODI success earned him a test call-up for the return Ashes series around the end of last year, despite his extremely modest record in Sheffield Shield cricket.
Although Australia destroyed England 5-0, Bailey was not a great success batting at number six with an average of 26.14 compared to his one-day average of nearly 50.
He was dropped for the test tour to South Africa in the New Year.
Appropriately, Bailey, who had never previously represented his country, took over as captain of the Twenty20 side after Clarke decided to drop the shortest format of cricket to concentrate on his own test and one-day form in 2011.
He led Australia to the semi-finals of the World Twenty20 in Sri Lanka in 2012 but they bowed out in the Super 10 group stage in Bangladesh earlier this year.
That the next World Twenty20 in India was just two years away in 2016 was a consideration when Bailey decided to step down.
“I wanted to give a new captain an opportunity to find his feet and put his mark on that team for the World Cup,” he added. (Reuters)