Melbourne- Australia captain Michael Clarke dropped a bombshell on the eve of the World Cup final by announcing he will retire from one-day cricket after Sunday's title-decider against New Zealand.

The 33-year-old said it was the "right time" for him to step back from the ODI format in order to prolong his test career and to allow his successor to take the one-day team forward.

"Tomorrow will be my last ODI game for Australia," Clarke told reporters at the Melbourne Cricket Ground where he hopes to lead Australia to a fifth world championship.

Sunday will mark Clarke's 245th one-day game for Australia, and the skipper said it had been "an honour and a privilege" to represent his country in that amount of games.

"I don't think it's realistic that I'll be fit and healthy and available to play the next World Cup so I believe it's the right time.

"I was very fortunate four years ago to get the opportunity to captain this one-day team and that was really good preparation for me leading up to this World Cup, and I think the next Australian captain deserves the same opportunity."

George Bailey led Australia in their opening match of the World Cup against England but was replaced when Clarke returned to fitness after hamstring surgery.

Bailey has proved an adept and capable leader during Clarke's regular absences due to injury but batsman Steve Smith, who led the test team with aplomb in the series win over India, will be heavily backed to succeed Clarke.

Smith has batted at number three during the World Cup and led from the front with a match-winning century in the semi-final against India.

Clarke, however, has been in scratchy form with the bat, with just one half-century against Sri Lanka in the pool phase.

Battling a succession of hamstring injuries toward the end of 2014, pundits and former players urged him to quit the one-day game, but he was adamant he would lead the team at the World Cup on home soil.

Clarke took over the one-day captaincy from Ricky Ponting after the Tasmanian stepped down following the quarter-final exit at the 2011 World Cup.

Just before the quarter-final match against Pakistan in Adelaide he said he had no intention of quitting, but on Saturday said he had changed his mind after speaking to his wife following the semi-final win in Sydney.

Clarke said he was leaving the one-day team in a better place but believed he still had a lot to offer the test side.

"I've never hid behind the fact that I find test cricket to be the pinnacle of the sport," he said.

"I don't feel bad about saying that test cricket is the toughest part of our game. I love that challenge."

Clarke has scored eight centuries in his 7,907 ODI runs at an impressive average of 44.42.

He has also proved a handy wicket-taker in the 50-over game, with his left-arm spin reaping 57 wickets at an average of 37.64.