The 64-year-old – best known for playing omelette-making Gwen in the aforementioned BBC television show set in Essex and Wales – had been partnered with professional dancer Aljaz Skorjanec.
During Saturday’s show on BBC One, the duo earned a score of 17 points from the judges for their Charleston set to Gina G’s classic pop track Ooh Ahh… Just A Little Bit.
Panelist Craig Revel Horwood admitted he "didn’t love" the routine, though fellow judge Motsi Mabuse urged the Welsh performer to "keep going".
Having landed in the bottom two across the first two weeks of the competition, the couple were ultimately sent home.
Walters is the second celebrity to exit this series after celebrity hairstylist Chris Appleton and professional partner Amy Dowden were eliminated last week.
Shaun Wright-Phillips and Alexis Warr and Melanie Walters and Aljaz Skorjanec hug during the results show on Sunday
PA
Sunday’s results edition saw Walters and Skorjanec, 36, face former footballer Shaun Wright-Phillips, who played for London clubs Chelsea and QPR, and his partner Alexis Warr in the dance-off.
Wright-Phillips and Warr had come bottom of the leaderboard with 15 points for a quickstep to The Monkees' song I’m A Believer.
After both couples performed their routines for a second time, the judges cast their final votes on who they wanted to save.
While Mabuse opted to save Walters, fellow judges Shirley Ballas, Anton Du Beke and Revel Horwood all chose to save Wright-Phillips and Warr.
The eliminated couple will appear on spin-off show It Takes Two on Monday evening.
Strictly - Saturday’s week 3 show leaderboard in full
* Delta Goodrem and Kai Widdrington – 33
* Tabby Stoecker and Mark Karmalita – 31
* Cach Mercer and Maddie Ingoldsby – 31
* Jamie Winstone and Carlos Gu - 28
* Bethany Antonia and Nancy Xu – 27
* Dani Dyer and Nikita Kuzmin - 27
* Lacey Turner and Vito Coppola – 26
* Graeme Hall and Lauren Oakley – 25
* Will Best and Diane Buswell – 25
* John Nellis and Katya Jones – 20
* Lawrence Robb and Jowita Przystal – 20
* Dame Sarah Storey and Julian Caillon – 20
* Melanie Walters and Aljaz Skorjanec – 17
* Shaun Wright-Phillips and Alexis Warr – 15
Australian singer Delta Goodrem had topped the leaderboard on Saturday with professional partner Kai Widdrington after their salsa earned 33 points.
It was the second week running that the pair had racked up the most points.
Elsewhere on Sunday night's episode, Ballas and Du Beke took to the floor as part of a showcase group performance, featuring two teams of professional dancers going head-to-head in a ballroom versus Latin showdown.
There was also a musical performance from singer Jalen Ngonda with his song Burning Temptation, accompanied by professional dancers Neil Jones and Lethabo Monametsi.
Delta Goodrem and Kai Widdrington topped the leaderboard on Saturday
PA
Walters is best known for playing Gwen West in the BBC comedy Gavin and Stacey. She played Stacey’s mother, appearing from its launch in 2007 and reprising her role for the 2024 Christmas special.
Her television work also encompasses roles in Coronation Street, Beyond Paradise, Being Human, Hollyoaks, Biff And Chip, and Doc Martin, alongside film credits including Submarine, Resistance, High Tide and Save The Cinema.
On stage, her theatrical work includes productions such as The Importance Of Being Earnest, Blood Brothers, Twelfth Night, Educating Rita and What’s New Pussycat?.
During the first week of the contest, the Welsh actress received a score of 15 for her cha cha cha, getting the same score the following week for a waltz to Edelweiss from The Sound of Music during Movie Week.
The remaining 13 couples will take to the dancefloor next Saturday for icons week.