The two sides announced the end of the saga on Wednesday afternoon following the second day of court-ordered mediation.

Folau had asked for $14 million in compensation for the sacking, while Rugby Australia said it was within its rights to sack him over a controversial Instagram post in April condemning "drunks" and "homosexuals", and

Rugby Australia and Folau released a joint statement after the settlement.

"Rugby Australia, NSW Rugby and Israel Folau have today settled their legal dispute following the dismissal of Israel Folau after he posted a religious message on social media," the statement said.

" The Social Media Post reflected Mr Folau's genuinely held religious beliefs, and Mr Folau did not intend to harm or offend any person when he uploaded the Social Media Post.

"Mr Folau wants all Australians to know that he does not condone discrimination of any kind against any person on the grounds of their sexuality and that he shares Rugby Australia's commitment to inclusiveness and diversity.

"Rugby Australia and NSW Rugby do not in any way agree with the content of the Social Media Post. Inclusiveness is one of Rugby's core values and it welcomes all people to the game, including all members of the LGBTI community.

"While it was not Rugby Australia's intention, Rugby Australia acknowledges and apologises for any hurt or harm caused to the Folaus.

"Similarly, Mr Folau did not intend to hurt or harm the game of rugby and acknowledges and apologises for any hurt or harm caused.

"Rugby Australia and Mr Folau wish each other well for the future. The parties do not intend to comment further on the terms of their settlement as it is confidential."

The off-field drama has been a major distraction for the sport, which has struggled to gain traction and maintain its fan base in recent years.

Super Rugby crowd numbers and broadcast figures have dropped and the Folau battle led to more fans turning away.

It is hoped the final chapter will give the Wallabies and the four Australian Super Rugby franchises a chance to get clean air and have a fresh start.

Dave Rennie has been appointed as the next Wallabies coach, replacing Michael Cheika, while Cameron Clyne will step down as chairman in the coming months.