Cyclist Travis Meyer and table tennis player Stephanie Sang became the second and third Australians to pull out of the event, following discus world champion Dani Samuels' withdrawal last week.
Australian Commonwealth Games chief Perry Crosswhite said he was disappointed in the withdrawals just a week out from the start of the event but respected the athletes' decisions.
He did not rule out further withdrawals but hoped that would not be the case.
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"I am disappointed on the basis that these Games will be a good experience particularly for all the athletes who come to it and of course we wouldn't be here if we didn't think the security wasn't being organised well and at the level it should be," Crosswhite told reporters in Delhi.
Meanwhile the Games have entered their most critical hours, says the top official of the sporting event.
"The work left to be done is quite extensive," said Commonwealth Games Federation president Mike Fennell says, who toured the athletes' village on Friday.
At a press briefing in the Indian capital, he listed problems with transport, security arrangements, fire and evacuation procedures and medical services.
"There's a lot of work to be done in the Games. It's not over yet," he said.
"What is clear is that the massive work that is being done now ought to have been done before."
Cameroon's chef de mission David Ojong said he remained uncertain whether the village would be up to standard as teams pour in over the next week.
'Accommodation was so dirty'
"The accommodation was so dirty and just uncompleted when we arrived three days ago," Ojong said. "Improvements have been fast, but we need conditions to keep on getting better every day."
Workers were racing to fix problems relating to water connections and electrical fittings at more than 100 flats in the village, the Press Trust of India news agency reported.
The Games, aimed at highlighting India's ambitions as an emerging superpower, had seemed on the brink of collapse a few days ago, amid worries about security, a footbridge falling down and complaints about the "filthy" state of the village.
On Saturday, an army engineering regiment began building a prefabricated steel walkway to replace the showpiece footbridge to the main stadium that collapsed earlier in the week, causing major embarrassment to Games organisers.
Athletes pull out
While the Games were set to go ahead, a string of big-name athletes have pulled out, many of them citing concerns about the presence of mosquito-borne dengue fever, while numerous teams delayed their arrival in New Delhi.
Olympic medallist Eamon Sullivan told reporters in Sydney that Australia's swimmers were well prepared to combat the outbreak of dengue fever.
"We've got mosquito nets, we've got mosquito repellent, we've got long-sleeve clothes, we've got wash that puts repellent on your clothes, we've got hand sanitizer, we've got the works," Sullivan said.
Some 2,728 people are suffering from dengue in New Delhi with another 97 new cases announced Friday. However, many cases are believed to be unreported.
Indian PM intervenes
With the entire event under threat, Prime Minister Manmohan Singh has personally intervened and the past few days have witnessed a military-style operation, with an army of cleaners deployed to make the village habitable and insect-spraying operations to combat mosquitoes at the site.
Fennell stressed that cancelling the Games was "never on our agenda" and said all 71 teams had now confirmed their participation.
"A lot has been put right. The efforts of all people should be applauded," he said. "Now we have to ensure that it is completed and sustained right throughout the Games."
Sitting next to Suresh Kalmadi, the embattled chairman of the Indian organising committee, who has borne the brunt of public criticism for what the local press has dubbed the "Shame Games", Fennell declined to focus the blame on any individual.
"I don't think there can be any question that we have to share blame and responsibility," he said.
New Delhi had been expecting 7,000 athletes and officials for the showpiece for Commonwealth countries, mostly nations and territories formerly in the British empire.
Among the stars to withdraw over security or health concerns are Australian world discus champion Dani Samuels, English Olympic 400m gold medallist Christine Ohuruogu and world triple jump champion Phillips Idowu, also of England.
While arguing that it was now time to celebrate the athletes who were taking part, Fennell acknowledged that the fiasco of recent weeks had badly affected India's international image.
"I think a lot of damage has been done to India as a country. People are questioning whether we should have come to India," he said.
"I would hope that at the end of all of this, India would have learned a great lesson and we also would have learned a great lesson working with a country like India."
In a recent online poll by the Times of India, 97 percent of respondents said India's image had been tarnished by the Games chaos.

