But any hope of a return to the NRL, where he began his career, has evaporated after ARLC chairman Peter Beattie said the dual international failed the character test and they would not register a contract.
"Israel Folau fails the NRL's inclusiveness culture, which is a policy strongly supported by the ARLC," Mr Beattie told AAP.
"The ARLC, therefore, would not support his registration to play NRL".
PM says posts were 'terribly insensitive'
On Friday, Prime Minister Scott Morrison weighed in, saying Folau's latest social media attack on homosexuals were "terribly insensitive".
"I thought they were terribly insensitive comments and obviously that was a matter for the ARU and they've taken that decision," Mr Morrison told ABC News.
"It is important that people act with love, care and compassion to their fellow citizens and to speak sensitively to their fellow Australians."
Contract terminated with Rugby Australia
Rugby Australia and NSW Rugby Union announced on Thursday they would terminate the player's contract, following his "disrespectful" social media posts about homosexuals a day earlier.
Folau posted an image to Instagram with a warning that "those that are living in Sin will end up in Hell unless you repent" alongside an image telling "homosexuals" to repent.
The post quickly generated a storm of controversy, with social media users and sports writers piling on the three-time John Eales Medallist.
Rugby Australia' chief executive Raelene Castle and NSW Rugby Union CEO, Andrew Hore issued a statement on Thursday night saying they intended to drop Folau.
"Whilst Israel is entitled to his religious beliefs, the way in which he has expressed these beliefs is inconsistent with the values of the sport. We want to make it clear that he does not speak for the game with his recent social media posts," the joint statement said.
"Israel has failed to understand that the expectation of him as a Rugby Australia and NSW Waratahs employee is that he cannot share material on social media that condemns, vilifies or discriminates against people on the basis of their sexuality.
"We have made it clear to Israel formally and repeatedly that any social media posts or commentary that is in any way disrespectful to people because of their sexuality will result in disciplinary action - in the absence of compelling mitigating factors, it's our intention to terminate his contract."
After the initial post on Wednesday Folau doubled down, tweeting"the devil has blindsided so many people in this world, REPENT and turn away from your evil ways".
He included a link to an article about a Tasmanian decision to legislate gender optional birth certificates.
In response, NSW Rugby Union initially labelled the comments "unacceptable" in and said they were under investigation by the integrity unit, putting Folau's future at risk.
"It does not represent the values of the sport and is disrespectful to members of the Rugby community," the statement read.
"The Rugby Australia Integrity Unit has been engaged on the matter tonight."
Folau was under contract until 2022, has won 73 caps and is a key part of Michael Cheika's plans for the tournament in Japan.
But it's not the first time Folau has been condemned for his extreme views after a similar anti-gay outburst on social media last year led to a warning.
Earlier, rugby great and former Wallabies captain Mark Ella said he "probably would have" sacked Folau for doubling down on homophobic social media posts.
"He got away with it the first time, you would like to think that maybe the RA (Rugby Australia) might actually stand up and do something," Ella told SBS News.
"We know he's religious but you can't come out and say these things, especially a second time around."
The storm comes as major Wallabies' sponsor Qantas, which threatened to pull their sponsorship after the first round of posts, described the comments as "really disappointing".
“We are pleased to see Rugby Australia’s condemnation of the comments and will await the outcome of their review," the statement read.
British-based LGBT charity Stonewall said the posts were an "example of how much work is still left to do to combat discrimination".
"It's important that Rugby Australia have stepped up to challenge Folau's abusive comments."
Former Wales international Gareth Thomas, who came out as gay in 2009, also responded to Folau's comments on Twitter.
"I don't write this with hate or anger after Israel Folau's comments. I write with sympathy," the 44-year-old wrote.
"To everyone who reads it, don't be influenced by his words. Be the better person and be YOU. Whoever YOU is..Hell doesn't await YOU. Happiness awaits YOU."
International Gay Rugby, the global organisation for the world's gay and inclusive rugby clubs, also hit out at the 30-year-old.
"The effects these hateful comments will have on LGBT people are enormously harmful," the organisation said in a statement:
"We want all LGBT athletes out there to know that rugby is a sport where you are welcome and respected, a sport of values that doesn't allow for such bigotry or discrimination of any kind."
History as an NRL player
Folau played 91 matches for Melbourne and Brisbane as well as eight State of Origins and eight Tests before switching to the AFL and rugby union.
It was touted that North Queensland could be interested in his services after Ben Barba received a life ban and they missed out on Valentine Holmes, who's in the US pursuing his NFL dream.
But any hope of Folau returning to the game in which he made his name is now gone and his future now appears to lie in overseas rugby union.
Under NRL CEO Todd Greenberg, the game has been highly progressive, publicly supporting marriage equality.
He earned criticism from conservative commentators and politicians for hiring US rapper Macklemore to perform gay anthem 'Same Love' at the 2017 grand final.
And for the last five years, the NRL has had a float in the Sydney Mardi Gras.