Australia will host West Indies in two Tests and three ODIs from January 17 to February 13.
Openers Cameron Bancroft, Marcus Harris and Matt Renshaw were considered as the front-runners to fill the role until Steve Smith threw his hat into the ring last week by saying that he wanted to do the job.
Renshaw was handed a Test lifeline as the only change in a 13-member squad for the two-Test series, starting on January 17 in Adelaide.
However, Bailey all but confirmed that Smith would open the innings against the West Indies.
Bailey further said that Green, who has been forced out of the side in recent times due to Mitchell Marsh’s brilliance, would definitely play against the West Indies and Smith expressing his interest in the opening role was a big factor behind it.
"For all intents and purposes, this is where Steve wants to stay. One of the things I'm really excited about the change is that I think he's really motivated and energised and excited about the opportunity, and fingers crossed that can provide some longevity in the format," Bailey told reporters.
"For someone who has achieved as much as he has over such a long period of time across all formats, it's a challenge or an itch he'd like to scratch and ultimately for us, as a team, it’s something that fits.
"It's selfless that someone who's had such success in one position or a couple of positions in the middle order, that he's willing and hungry to have a crack at something different.
"And it provides an opportunity to slot Greeny into number four where he's had success for Western Australia.
"The regard in which we hold Cameron and the way the rest of that batting order is functioning left us feeling we have someone we think is pretty talented who was potentially going to find it pretty hard to get any Test cricket in the next 12 months or so."
Bailey said the panel had discussed the possibility of a straight swap of Green for Warner in the opening role, but decided to keep the all-rounder in the middle-order.
"I think he's technically capable of doing that (opening)," Bailey said of Green.
"But also as a younger guy who is potentially going to bowl some overs as well, and given the enormous success at first-class level wherever he's batted but particularly at four or five, I think it (four) is the ideal spot for him to set him up for success."
Meanwhile, the selectors also announced a 13-member squad for the ODI series against the West Indies that follows the Tests, with Pat Cummins rested and Smith taking over as captain.
Marsh, Mitchell Starc, and Josh Hazlewood will not feature in the three games as well.
"The squad strikes a balance between players continuing to make their mark on international cricket, playing alongside some of our most experienced players with an eye to the future in this format," said Bailey of the one-day squad.
Australia Test squad for West Indies series: Pat Cummins (capt), Scott Boland, Alex Carey, Cameron Green, Josh Hazlewood, Travis Head, Usman Khawaja, Marnus Labuschagne, Nathan Lyon, Mitchel Marsh, Matt Renshaw, Steve Smith, Mitchell Starc
Australia ODI squad for West Indies series: Steve Smith (capt), Sean Abbott, Nathan Ellis, Cameron Green, Aaron Hardie, Travis Head, Josh Inglis, Marnus Labuschagne, Glenn Maxwell, Lance Morris, Jhye Richardson, Matt Short, Adam Zampa
(cricket.com.au inputs)