Lote Tuqiri has engaged lawyers and will launch immediate legal action against the Australian Rugby Union following the shock termination of his lucrative contract.

Tuqiri's agent Les Ross confirmed the former Wallabies winger would fight his sacking, which was announced late on Wednesday by an ARU email.

"All I can tell you is that Lote disputes that the ARU are entitled to terminate his contract and he has retained solicitor Mr Mark O'Brien and Mr Tony Marr, senior counsel, to immediately commence proceedings against the ARU," Ross told AAP.

Mystery surrounds the reason for Tuqiri's dismissal, but the ARU had been conducting an investigation into a possible breach of the players' code of conduct.

The ARU statement read: "The employment contract of Lote Tuqiri has been terminated effective today.

"ARU has treated this issue as a standard employment matter.

"The ARU will not make any further comment on the matter as it may be the subject of legal proceedings."

It is understood the "legal proceedings" referred to are Tuqiri's action against the ARU and the winger has not broken the law.

It is also understood Tuqiri's absence from Australia's first four international matches this year was not related to the reason for his sacking.

One of Australia's highest paid rugby players, Tuqiri was contracted to the ARU until 2012.

He was signed to a massive deal in 2007 as the ARU regime of Gary Flowers fought off an offer from NRL club South Sydney.

Speculation about the ARU investigation had pointed to a late night visit to the Crown Casino in Melbourne in the lead-up to last month's Test against Italy, which also reportedly involved backs Adam Ashley-Cooper and Peter Hynes.

An internet report had also suggested four high-profile rugby players were involved in a serious off-field incident.

Another report said Tuqiri had been issued with a "final warning letter" after a late-night drinking session with Wallabies teammates in 2007.

An ARU spokesman refused to comment further but the body's chief executive John O'Neill will front the media when the Wallabies Tri-Nations squad is announced on Thursday.

A spokesman for Tuqiri's Super 14 team, the NSW Waratahs, said the franchise would be making no comment as the matter related to an ARU investigation.

Rugby Union Players Association boss Tony Dempsey was unaware of the situation when contacted by AAP.

"It certainly comes as a surprise," he said.

"We always represent our members, we always look to provide them with advice and we always ensure that all dealings are fair and reasonable."

Tuqiri, 29, has a far from squeaky clean off-field record since switching to union from NRL club Brisbane in 2003.

In 2005 he was involved in the infamous "ice-throwing" incident in Cape Town which resulted in Matt Henjak being sent home.

Tuqiri was fined $500 and given a suspended two-match ban following the incident.

He was sent home from a Wallabies training camp in January 2007 for failing a fitness test and months later apologised to teammate Sam Norton-Knight for shoving him and giving him a verbal spray during a match for NSW.

Later that year, he apologised to Wallabies selector Michael O'Connor for putting a conversation on speaker-phone as O'Connor was being critical of Waratahs teammate Peter Hewat.

And in July 2007 he was banned for two matches and fined $20,000 for failing to attend a team medical and registering an alcohol reading at a team breath test.

Speculation arose that the 67-Test veteran may consider a move back to rugby league when he was left out of Australia's first four internationals of 2009, with Lachie Turner, Drew Mitchell and Hynes all preferred on the wings.

But Tuqiri denied he would quit rugby in his newspaper column last weekend, and would earn considerably less in the 13-man game.

The Gold Coast Titans have already expressed an interest in Tuqiri, while rebuilding Cronulla and St George Illawarra, the home of former clubmates Wendell Sailor and coach Wayne Bennett could also hold appeal.

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