Waugh spoke about his decision to drop Warne for the final Test of the series against West Indies in 1999 in his new book "The Meaning of Luck" on Friday (August 9). Waugh said that the call, taken in conjunction with fellow selector Geoff Marsh, "shaped and defined me".
"I lost a great friend but gained fortitude from the experience and learnt categorically that knowing what is right and acting on it are two different things," Waugh wrote, according to a report in "Herald Sun".
"One day, I hope Shane comes to terms with the fact it wasn't about me not trusting his immense skill and innate love for the big occasion, but rather a common-sense decision based on facts and the key ingredients every leader must trust and rely on 'gut instinct'," he added.
During that five-Test series, Australia won the first and lost the next two. For the final Test, with Warne dropped, Australia's spinners were Stuart MacGill and Colin Miller. They won the fifth Test and squared the series to retain the Frank Worrell Trophy.
On Friday, Waugh said that he and Warne "have a bit of distance now."
"I always considered Shane a really close friend, but we have a bit of distance now and I think it is probably because of that. I don't think Shane really did recover. It wounded him at the time. For a great player, he was surprised by it and did not expect it."