Graf, who was forced to take painkillers earlier this month because of a foot injury, aggravated a shoulder problem in practice and it got worse during a defeat that put Australia level after Anke Huber's 6-1, 6-2 victory over Elizabeth Smylie in the opening rubber.
The Germans then became the first defending champions to lose in the first round as Smylie and Stubbs beat Huber and Barbara Rittner 5-7, 6-4 6-3 to clinch a 2-1 victory.
'I wanted to play and it (the shoulder) felt a little bit better in practice in the morning,' Graf said. 'But I didn't step in fully fit. I haven't played much in the past two weeks and I didn't feel very comfortable. The shoulder hurt during the match and it was a big part of my defeat.'
The German captain, Klaus Hofsass, took full responsibility for his team's elimination. 'I knew about Steffi's injury and I should have never let her play. It was my big mistake,' he said.
Great Britain were beaten by Spain, the top seeds, with Jo Durie and Clare Wood managing only six games between them in their singles defeats to Conchita Martinez and Arantxa Sanchez Vicario respectively.Reuse content