Smith was brought to Sri Lanka as cover for opener Mitchell Marsh, who sustained a testicular injury when struck at training in Colombo, missing the opening two matches as a result.
Smith trained with the squad in Kandy on Sunday ahead of the match against tournament co-hosts Sri Lanka later on Monday.
Selector Tony Dodemaide said fitness queries for Marsh and all-rounder Marcus Stoinis had prompted Smith's inclusion.
"Regulations stipulate any squad change must be submitted and activated at least one day prior to a match," he said in a statement.
"With Steve here, along with some uncertainty around Mitch and Marcus Stoinis, it made sense he (Smith) is activated and available for selection in time for the match, if required."
Veteran batter Smith could not break into the World Cup squad initially despite his strong form in Australia's Big Bash League in the buildup to the global tournament.
Hazlewood was ruled out after running out of time to recover from Achilles and hamstring injuries, but selectors initially declined to name a replacement.