Folau, who was sacked last month for an offensive social media post, had already raised A$240,000 from more than 2,500 people within 12 hours of his campaign going live on crowd-funding website Gofundme.com early on Friday.
The fundamentalist Christian was found guilty of a "high-level breach" of Rugby Australia's code of conduct after he posted on social media that hell awaits "drunks, homosexuals, adulterers" and other groups.
He said his action was "about defending the right to religious freedom", and he needed the money to prepare for a long legal battle after spending over A$100,000 fighting his termination unsuccessfully during RA's code of conduct hearing.
"Rugby Australia have already said that they will 'divert significant resources' to fight me in court," the 30-year-old said on his Gofundme page.
"Even if I win, Rugby Australia can appeal. There is every chance that a prominent test case like this could take years and eventually end up in the High Court of Australia.
"The money I am asking for is solely to fund the rest of my action in court."
Folau's contract, which he signed late last year, was worth a reported A$5 million.
The 73-test fullback was one of the country's highest paid players after crossing to the code in 2013 from Australian Rules football.
Following a lucrative career in Australia's National Rugby League, he played two relatively unsuccessful seasons with the Greater Western Sydney Giants in 2011-12 while on a bumper multi-million dollar contract.
Folau on Friday gave his first media interview since his dismissal to radio host and former Wallabies coach Alan Jones, a long-time critic of Rugby Australia and its CEO Raelene Castle.
"When I said things that come from the bible, it comes from a place of love," Folau said.
"From my perspective I'm always about sharing that from a place of love and believing in the bible, that people have the opportunity to hear that.
"So that they do repent if they choose to and turn away from that and have an opportunity to be in heaven one day, which is what I long for people to choose to do."
News of the campaign drew a mixed response on social media and triggered opposing crowdfunding campaigns to fight Folau's cause.
Former Wallabies winger and TV pundit Drew Mitchell was scathing of his erstwhile team mate and compared Folau's campaign with others seeking funds for sick children.
"YOU are in a fight that YOU chose to be in after YOU broke the terms of YOUR contract, the kids below are in a fight they NEVER wanted to be in & yet YOU think YOU deserve donations more than they do??!!" Mitchell wrote on Twitter.
"It's no longer about religion, it's about YOU and YOUR greed."
(Reporting by Ian Ransom; Editing by Greg Stutchbury)
