Disgraced Pumas skipper Pablo Matera has been reinstated as captain but will not face the Wallabies in Saturday night's final Tri Nations clash in Sydney.
Matera was sensationally stripped of the captaincy and stood down from the Bankwest Stadium Test, along with teammates Guido Petti and Santiago Socino, after racist tweets at least seven years old re-surfaced.
The tweets related to Bolivian and Paraguayan domestic staff and black people, and were described by the Argentina Rugby Union (UAR) as "discriminatory and xenophobic".
The UAR confirmed on Thursday the players had faced a disciplinary hearing, where they had shown great remorse, and the ban had been lifted, however the parties agreed they wouldn't play in the Sydney match.
Centre Jeronimo de la Fuente will lead the team in Matera's absence.
Pumas coach Mario Ledesma said the players had suffered through the week.
"They reached an agreement with the Union about not playing this game," Ledesma said on Thursday following the team announcement.
"It was really difficult and not a lot of sleep ... a lot of hate going on and they felt really affected and obviously the shame of what they did."
Ledesma defended the players, describing them as "great men", who no longer had the same views they had as teenagers.
"These three fine players and great men are great human beings; they have been suffering a lot this week, their families have been suffering a lot this week and it's really sad to see.
"Obviously they acknowledge what they did and are regretful and ashamed of what they did ... but what I can say is they are not the same people that they were at 17 or 18 years old."
The UAR issued a statement on Thursday and said while they may face further sanctions the commission had resolved to lift the suspension and restore the captaincy to Matera, who last month became a national hero after he inspired the team to their first win over the All Blacks.
"The three players expressed their deep regret, reiterated the apology, ratified that it is not what they think and that it was a reckless act typical of immaturity," the UAR said.
"The disciplinary committee has considered and assessed the attitude of the three players, and understands that they have not repeated similar actions during these more than eight years, and that they have shown during this time to be people with firm and upright values, worthy of being part of our team."
The players also had the support of Argentine rugby greats Agustin Creevy and Agustin Pichot.
Former captain Creevy, Argentina's most-capped rugby player of all-time having played 89 Tests including 49 as skipper, said the tweets no longer represented the players.
"As a group we know each other. I know Pablo, Guido and Santiago and I know who they are today," Creevy wrote in a statement on Twitter.
"The sordid tweets they wrote years ago do not represent them at all. They have acknowledged it themselves, felt ashamed and apologised.
"All people make mistakes, and athletes are not exempt from that."
Former halfback Pichot played 71 Tests for the Pumas before becoming one of world rugby's most respected administrators.
He said the players had matured since the posts.
"All three players' tweets were wrong," Pichot tweeted.
"I believe in their repentance and in their maturation since they wrote it."
ARGENTINA: Santiago Carreras, Bautista Delguy, Matias Orlando, Jeronimo de la Fuente (captain), Emiliano Boffelli, Nicolas Sanchez, Felipe Excurra, Rodrigo Bruni, Facundo Isa, Santiago Grondona, Marcos Kremer, Matias Alemanno, Francisco Gomez Kodela, Julian Montoya, Nahuel Tetaz Chapparo
Replacements: Jose Luis Gonzalez, Mayco Vivas, Juan Pablo Zeiss, Lucas Paulos, Francisco Gorrissen, Gonzalo Bertranou, Dominic Miotti, Santiago Chocobares