Australia are searching for a new manager following the sacking of German coach Holger Osieck earlier this month as they prepare for next summer's World Cup finals.
Hiddink, who guided Australia to the 2006 World Cup finals, has emerged as a leading candidate for the role again, but the Dutchman has informed Football Federation Australia that he is not interested in returning to take charge of the side.
The 66-year-old, who quit Russian side Anzhi Makhachkala in July, admits he is not looking for a new job and is keen to take a break from the game.
"There has been contact between Australia and me," said Hiddink.
"But I have told them that the World Cup is not an option for me. Not with Australia - or with anyone else.
"I have taken a step back for the moment and want to enjoy that until next summer.
"I've been so busy and travelled so much with teams and countries, I need a breather. I don't want any obligations now, so I can weigh up options for the new season."