George Bailey admits confidence within the Australia camp is running dry following their early elimination from the Champions Trophy.

Australia were knocked out of the ODI competition this evening after a 20-run defeat to Sri Lanka at the Kia Oval.

Having already lost to England in their first Group A fixture, Australia then fell victim to the weather in their washed out draw with New Zealand, and they were unable to chase down a target of 254 last night against Sri Lanka, who edged to a nervous win to set up a semi-final clash against India.

After coming in to the Champions Trophy on the back of a recent 4-0 Test series defeat in India, Australia's failure to win a match in this competition - not to mention their off the field troubles - mean the Baggy Greens will be stuttering, rather than strutting in to the Ashes, much to England's delight.

"You're probably right, there is probably not a great deal of confidence there," said Bailey, who stood in for injured skipper Michael Clarke for the third straight game today, when it was put to him that spirits were low.

The draw against New Zealand meant Australia were up against it if they were to progress to the final four today.

Only a comprehensive win over Sri Lanka would mean they overtook New Zealand's run-rate and secure a place in the last four.

They needed to reach 254 within 29.1 overs to secure second place in Group A, but they fell 20 runs short with seven and half overs left despite a 41-run last wicket partnership between Clint McKay (30) and Xavier Doherty (15 not out).

Baileym, who had played for Hampshire as the county's main overseas player prior to the Trophy, thinks Australia were fighting a losing battle once they lost to England by 48 runs in their first group game.

"We said at the start that you need to start the competition well in order to get your confidence up so losing to England was a major cock-up," Bailey said.

"The weather then played its part unfortunately, that was a bit of bad luck because we posted a good score (before rain stopped play against New Zealand) but that's part of the game I guess. There's not much more we could have done."

Bailey said that Clarke, who has been suffering back problems, is likely to return for Australia's pre-Ashes warm-up match against Somerset at Taunton on June 26.

Sri Lanka will face India in Cardiff on Thursday, 24 hours after England host South Africa at the Oval in the other semi-final.