Steve got hit twice on day four of the second Ashes Test match -- first on the elbow and then on the neck during bowling by Archer.
The 30-year-old fell down after the second hit and was attended by physios from both England and Australia.
The batsman had to leave the park to undergo a concussion test. After he passed the concussion test, the batsman made his way back to the crease and was dismissed by Chris Woakes after scoring 92 runs.
But Steve woke on Sunday morning with a "bit of headache and a feeling of grogginess". He was re-tested for concussion which showed his condition had deteriorated.
Match referee Ranjan Madugalle approved Steve's substitution under the recently introduced concussion rules which would allow Labuschagne to bat and bowl in the ongoing Test. It is the first time that a concussion substitute has ever come into a Test match.