The right-handed batting all-rounder, who bowls leg-breaks as well, became Test cricket's first ever concussion substitute who will be allowed to bat in Australia's second innings.
Labuschagne made his Test debut against Pakistan in Dubai last year. In five Tests so far, the 25-year-old has scored 210 runs at 26.25.
Smith woke up on Sunday morning with 'a bit of a headache and grogginess', said a statement issued by Cricket Australia (CA).
Smith was forced to retire on Saturday while batting on 80 after being hit by the Archer bouncer. However, he cleared a concussion test and returned to the crease before being dismissed for 92.
Another concussion test was conducted before the fifth day's play as per CA protocol, which "demonstrated some deterioration from his testing which is consistent with the emergence of the symptoms he was reporting."
"On that basis Steve has been withdrawn from the match by team doctor Richard Saw and the Australia team will lodge an application for a concussion substitute with the ICC match referee in line with the ICC protocol.
"In terms of Steve's availability for the third Test, this will be considered over the coming days but the short turnaround to the next Test is not in his favour. Steve's fitness will be assessed on an ongoing basis. Steve will undergo a precautionary scan on his neck on Sunday," the CA statement said.
The third Test begins in Leeds on August 22.
( With inputs from IANS )
