For the second time in the tie, which spilled into its fourth day because of heavy rain on Sunday, Oliver Rochus brought Belgium level when he downed Peter Luczak 7-6 6-4 6-7 7-6 at the Cairns International Tennis Center.
In the decider, Steve Darcis beat Carsten Ball 7-6 6-3 6-4 to spoil Lleyton Hewitt's celebration after the former world number one had emerged as Australia's most successful player in the competition's history, sharing the distinction with Adrian Quist.
The setback left Australia captain John Fitzgerald hoping for a better luck next year and underlined the decline of the former tennis powerhouse.
"Do we think we can qualify next year? Absolutely," he was quoted as saying by the Australian Associated Press (AAP).
"It is hard to swallow (being out of the World Group) but it is a different sport now.
"It was a different competition back then - you have to be realistic about it."
Hewitt had beaten Ruben Bemelmans 7-6 7-5 2-6 6-4 in the first singles to join Quist as Australia's most successful Davis Cup player with 43 wins.
Belgium, however, drew level when Rochus got the better of Carsten Ball 6-4 6-4 7-6.
Hewitt put Australia ahead again on Saturday when he teamed up with Paul Hanley for an easy 6-1 6-2 6-4 win over Rochus and Bemelmans.
Hewitt sustained a wrist injury in the process that ruled him out of the reverse singles and his late replacement Luczak could not reproduce the form that had helped him subdue Rochus in both of their previous encounters.
