The Aussies were beaten by India by eight wickets on Tuesday at the MCG, leveling the series at 1-1 after Australia had won the First Test in Adelaide by the same margin.
Warner missed both matches with a groin strain but he was seen batting at the MCG nets on day four and is set to replace Burns who has been in poor form and only managed scores of 4 and 0 in the Second Test.
The hosts will also be boosted by the potential availability of Will Pucovski after his recent bout of concussion, while fringe all-rounder Sean Abbott is fit again after a calf issue.
Australia national selector Trevor Hohns said: David Warner, Will Pucovski and Sean Abbott will rejoin the squad in Melbourne tomorrow evening in preparation for the Sydney Test.
David has made strong progress in his recovery from injury and will be given every chance to play in Sydney with another seven days until the match. Sean has fully recovered from a calf strain and is also available for selection.
Will is in the final stages of the graduated return to play protocols and has been symptom free for some time. He will be fit to play in Sydney subject to completing the return to play protocols and an independent assessment.
Joe Burns has been released from the squad and will return to the Brisbane Heat. Unfortunately, Joes returns havent been what he or the selectors would like or what we consider he is capable of.
India, who are without captain Virat Kohli for the rest of the series, have far fewer headaches after their dominant display.