The Pakistan ace stormed off the square in disgust after failing a late brief fitness test on the toe problem which has been troubling him in recent weeks.
It was a major shock for Lancashire as they aimed for another Lord's appearance.
Wasim did not bowl in the AXA League victory over Gloucestershire at Old Trafford on Sunday, but after hammering an unbeaten 75 in the Lancashire innings, he was still expected to play today.
It wasn't all bad news for Lancashire as Mike Atherton recovered from his stomach bug and John Crawley also passed a fitness test on the elbow problem which kept him out on Sunday.
The pair opened the Lancashire innings and reached 33 wihout loss from the opening 13 overs.
Crawley took over from Wasim as skipper with Mike Watkinson also making an unexpected return to the team.
Lancashire were anxious to avoid a repeat of the Benson and Hedges Cup quarter final against Surrey at the Oval when they gambled on Wasim's recovery from a shoulder injury only for it to backfire disastrous.
Hampshire won the toss and asked Lancashire to bat. At least three of Lancashire's team - Ian Austin, Peter Martin and Andy Flintoff - had an extra distraction, with England due to name their squad for the forthcoming one-day tournament against South Africa and Sri Lanka this afternoon.
Lancashire had seven players named in England's initial 37-man squad with Mike Atherton, Warren Hegg, John Crawley and Graham Lloyd also in contention.
But Austin, Martin and Flintoff were the three most likely to get the nod for the matches against Sri Lanka at Lord's on Sunday, and South Africa at Edgbaston the following Tuesday.
Flintoff looked a certainty until his unfortunate pair in the fifth Test at Headingley and the knives are out for him now in some quarters.
For Austin and Martin, selection would be a reward for their consistent performances for Lancashire in both one-day and championship cricket over the last few years.
Martin was a regular in England's one-day teams this time last year after peforming solidly in the otherwise disastrous World Cup campaign in India and Pakistan in 1996.
But if all three are selected it would be bad news for Lancashire's championship bid. They face Yorkshire at Headingley on Friday and Durham at Chester-le-Street next Wednesday and anyone selected for the triangular tournament would be unavailable for both games.