The Australian team missed its planned departure to Bangladesh after being warned by its government that there was a potential security risk from militants.
Cricket Australia (CA) instead sent two security experts and a manager to meet with top Bangladesh security and intelligence officials.
CA said on Tuesday that no decision on the fate of the tour had yet been made but the delegation was already coming home, which Australian media said was a clear sign the series would be cancelled.
"Following yesterday's meetings, our Head of Security, team manager and team security manager are on their way home from Bangladesh for further meetings with the Department of Foreign Affairs and Trade (DFAT) and to brief our Board, Management and players on the situation," CA said.
The Australians were due to fly from Sydney on Monday morning for the three-week tour which includes two tests but CA postponed the team's travel plans after DFAT warned that militants could be planning an attack.
Bangladesh Cricket Board officials said they understood Australia's concern but were sure the team would be safe and the tour would go ahead.
However, at the same time the Australian security delegation was in Bangladesh, an Italian aid worker in Dhaka was shot dead in an attack claimed by Islamic State.
Western embassies in Bangladesh have restricted the movements of their diplomats, citing "reliable" information that more foreign interests will be targeted.
On Tuesday, the Bangladesh home affairs minister Asaduzzaman Khan told reporters in Dhaka the Australian team had nothing to be worried about.
"There is no reason of skipping Bangladesh tour by Australian cricketers on excuse of the murder of Italian national in Dhaka," he said.
"These are two separate things and I believe the Australian team can safely come to Bangladesh for their scheduled matches. They will be given the necessary safety measures."
Australia has not played a test match in Bangladesh for a decade but were scheduled to make their return this year, playing a three-day warm-up match in Fatullah, starting Oct. 3, before back-to-back tests in Chittagong from Oct. 9 then Dhaka from Oct. 17.
Militants have targeted secularist writers in Bangladesh in recent years, while the government has cracked down on Islamist groups seeking to make the South Asian nation of 160 million people a sharia-based state.
(Reporting by Julian Linden in Singapore, additional reporting by Ruma Paul in Dhaka; editing by Sudipto Ganguly)
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