Watson, James Pattinson, Mitchell Johnson and Usman Khawaja each failed to deliver a presentation on what they all brought to the team after a two-day break following the team's humiliating innings-and-135-run loss in the second Test last week.
While Howard conceded the four players committed minor breaches of the team's disciplinary code on this occasion, he said it was the latest of numerous instances of ill-discipline and the Australian hierarchy were forced to draw a line in the sand as CA strove to raise the team's levels of professionalism.
"Over a period of time, [to try and improve] the discipline of the whole system, to get better, that's what the team performance review is about," Howard said.
"Across the board there have been some wins, there are people that are doing this and raising the level and there are other people that are taking longer to get on board.
"Eventually, at some stage, unfortunately you've got to make a call and these conversations had lots of times (where it was asked): 'What should we do? What's our next action? What's the consequences?'
"There have been plenty of warnings and as a consequence, you eventually have to make a call and that call was made. Not easy, I appreciate that.
"You can only get your last chance so many times."
Vice-captain Watson has since left India, despite being eligible for selection in the fourth and final Test in Delhi starting March 22, to be with his pregnant wife in Australia and reportedly consider his cricketing future.
Howard would not go into the specifics of the issues that preceded the latest disciplinary contraventions but made it clear that all four players, including Watson, would be welcome back in the side after serving their respective one-match suspensions.