Ed Cowan, the incumbent Test opener, and Australia's Twenty20 captain George Bailey, have missed out on national deals as part of a major reduction of Cricket Australia's contract list. However, the selectors have found room in the 17-man group for Mitchell Johnson, despite his disappointing and injury-affected year, and the limited-overs specialists Xavier Doherty and David Hussey, neither of whom are likely to be in serious contention for the Test side during the coming year.

The signing of a new Memorandum of Understanding (MoU) between Cricket Australia and the Australian Cricketers' Association (ACA) on Friday allowed the contract list to be finalised, and the most significant feature was the slashing of the number of contracts. Last year, 25 contracts were handed out but a reduction in that number was a key recommendation of the Argus report into Australia's performance.

David Warner, Mitchell Starc, Matthew Wade and Nathan Lyon have all been added to the list from outside last year's initial 25, while a host of players have not had their contracts renewed. The veteran fast bowler Brett Lee is gone from the list, although he remains in Australia's limited-overs plans and is part of the one-day squad currently in England, while the promising young batsman Usman Khawaja was also omitted.

The offspinners Jason Krejza and Nathan Hauritz, the wicketkeeper Tim Paine and the batsman Callum Ferguson were all dropped after not playing a match for Australia during the last contract period. The opener Phillip Hughes, batsmen Shaun Marsh and Cameron White, allrounders John Hastings and Steven Smith, and fast bowler Doug Bollinger have also been axed after slipping significantly in the pecking order.

There was no room for Peter Forrest, the Queensland batsman, who made a promising start to his international career during the summer, nor for the seamer Clint McKay, who played 16 matches for Australia in the shorter formats over the past year. The allrounder Daniel Christian played 17 games for Australia during the last contract period but did not make the cut.

One of the most notable features of the contract list was the imbalance between batting and bowling, with only six specialist batsmen handed deals: Michael Clarke, Ricky Ponting, Michael Hussey, David Hussey, Shane Watson and David Warner. Cricket Australia's chief executive, James Sutherland, said the disproportionate numbers were likely to be due to the selection panel's uncertainty over the make-up of their preferred batting group, beyond the core players.

"My sense is that the jury's out to some extent on the batting side of things," Sutherland said. "We will go into international cricket matches with a certain amount of batsmen to do the job. But there is probably some uncertainty in the selectors' eyes about the exact make-up of the team in Tests and one-dayers and Twenty20s going forward. The future will decide that."

The most surprising omissions were those of Cowan and Bailey. Cowan has played Australia's past seven Tests and is expected to retain his position at least for the initial Tests of Australia's home summer against South Africa in 2012-13. But while his form has been encouraging he is yet to provide the kind of big score that could have swayed the chairman of selectors John Inverarity and his panel to hand him a deal.

Bailey will captain Australia at the ICC World Twenty20 in September but he will likely do so as a player contracted to Tasmania rather than Australia. Bailey has a chance to hold down a one-day international position during the ongoing tour of England and Ireland, and there is a strong possibility he could be upgraded to a national contract before the World T20.

To be upgraded from outside the initial contract list, a player must accumulate 12 points based on how many matches they play for Australia - Tests are worth five points each, ODIs are worth two and T20 internationals are worth one. The system means that should Cowan play three Tests during the summer he will be given a mid-season national contract, while Bailey and other players on the fringes have the chance to gain deals throughout the year.

"There is a significant provision for upgrades," Sutherland said. "In the past there have been some contracts that have been provided at the start of the period prematurely, and players haven't necessarily played the requisite number of matches during the course of that contract year. This remodelling doesn't in any way take away the right of a player to be upgraded to a contract if they play the right number of matches. There's a provision for about 13 additional contracts to be upgraded during the year."

Paul Marsh, the ACA chief executive, said the contract lists in previous years had been too large and it was not unreasonable to expect fringe players to play a certain number of games to earn deals.

"There was no doubt in our mind and Cricket Australia's mind that we had too many contracts," Marsh said. "Right from the start we presented those figures to [the players] and they thought it was the right thing to do. Someone like George Bailey, who sits on our board, is probably a victim of this new system, but to his credit he was one of the big supporters of it. The players look at what's best for the collective player group and for Australian cricket and it's the right outcome."

Cricket Australia contracted players Michael Clarke, Pat Cummins, Xavier Doherty, Brad Haddin, Ryan Harris, Ben Hilfenhaus, David Hussey, Michael Hussey, Mitchell Johnson, Nathan Lyon, James Pattinson, Ricky Ponting, Peter Siddle, Mitchell Starc, Matthew Wade, Shane Watson, David Warner.