A Rugby Football Union spokesperson confirmed there was an "altercation" during a social event at the squad's heat and humidity training camp in Italy last week.
As a result, Te'o and Brown were dropped from the squad for Sunday's visit of Wales to Twickenham in a match staged 24 hours before head coach Eddie Jones finalises his 31-man World Cup squad.
Despite the RFU's earlier admission, Jones bizarrely replied when asked about the incident: "No, I'm not able to confirm that. I'm not able to confirm. I think I've answered the question."
Plans for the opening warm-up Test against Warren Gatland's team have been disturbed by injuries to centre Henry Slade, flanker Sam Underhill and wing Ruaridh McConnochie.
A day after naming the starting XV, Jones was forced into a significant reshuffle, including to the back row, where the experiment of deploying opensides Underhill and Tom Curry in tandem will have to be delayed.
Slade (knee), Underhill (toe) and McConnochie (hip) have been ruled out, so Jonathan Joseph, Joe Cokanasiga and Lewis Ludlum have been propelled into the starting XV.
Facing an experimental side picked by the 59-year-old head coach is Wales's strongest available XV, including 13 starters from the Grand Slam-clinching victory over Ireland in March.
Jones, however, shrugged off the mounting problems as ideal for this stage of tournament preparation.
"It's all part of a World Cup campaign - adapting, adjusting, bring people in and out, finding your role. It's a most fascinating time," he said.
Wales will become rugby union's new number one-ranked nation if they avoid defeat against England at Twickenham on Sunday after New Zealand's 47-26 Rugby Championship defeat to Australia on Saturday.
World Rugby's latest rankings list, to be published on Monday, will confirm the end of New Zealand's 10-year reign at the top if Wales triumph.
Gatland's side, who are chasing a 15th successive victory, have made a change to their match-day 23 for Sunday, with scrumhalf Tomos Williams being ruled out.
His place on the bench has been taken by Ospreys' Aled Davies.
15 Elliot Daly, 14 Joe Cokanasiga, 13 Jonathan Joseph, 12 Piers Francis, 11 Anthony Watson, 10 George Ford (captain), 9 Willi Heinz, 8 Billy Vunipola, 7 Tom Curry, 6 Lewis Ludlam, 5 Charlie Ewels, 4 Joe Launchbury, 3 Dan Cole, 2 Luke Cowan-Dickie, 1 Ellis Genge
Substitutes: 16 Jack Singleton, 17 Joe Marler, 18 Harry Williams, 19 George Kruis, 20 Courtney Lawes, 21 Ben Youngs, 22 Joe Marchant, 23 Manu Tuilagi
Liam Williams, 14 George North, 13 Jonathan Davies, 12 Hadleigh Parkes,
11 Josh Adams, 10 Gareth Anscombe, 9 Gareth Davies, 8 Ross Moriarty, 7
Justin Tipuric, 6 Aaron Wainwright; 5 Alun Wyn Jones (captain), 4 Adam
Beard, 3 Tomas Francis, 2 Ken Owens, 1 Nicky Smith
16 Elliot Dee, 17 Wyn Jones, 18 Dillon Lewis, 19 Jake Ball, 20 Aaron
Shingler, 21 Tomos Williams, 22 Dan Biggar, 23 Owen Watkin