Following her 6-2 5-7 6-4 defeat to fellow former world number one Ana Ivanovic in the Auckland Classic final on Saturday, Williams withdrew from the Hobart event to recover ahead of the first Grand Slam of the season beginning next week.
"After a long week during my first tournament of the year, my body needs time to rest and recover," the 33-year-old Williams told the Hobart International website.
"Unfortunately, I am not able to play this week in Hobart. I was looking forward to playing in Tasmania and I sincerely do hope to play there in the coming years," the seven-times Grand Slam winner added.
Stephens, the world number 12, also saw her preparations for the Australian Open compromised.
"I was having some pain in my wrist and the doctor recommended I not play this week," the 20-year-old American, a semi-finalist at Melbourne Park a year ago, said.
"This is a difficult decision, but the best decision for me and my team to make," she added.