Premiers Melbourne Storm have been stripped of two NRL premierships and fined a total of $1.6 million after being found guilty of massive, long-term salary cap breaches.

NRL chief executive David Gallop announced they would also not be allowed to accrue any premiership points in the 2010 season.

Gallop said the Storm had rorted the salary cap by at least $1.7 million over five years.

"They had a long-term system of effectively two sets of books and the elaborate lengths they have gone through to cover this up has been extraordinary," said Gallop.

While Melbourne lost their titles from the 2007 and 2009 seasons, Gallop said neither losing grand finalists Manly or Parramatta would assume those titles.

Gallop said Storm representatives on Thursday confessed to a well-organised system of paying players outside the cap.

"The breakthrough in the investigation was the discovery by the salary cap auditor (Ian Schubert) of a file in a separate room at the Storm to the room which contained the file with the player's contracts, outlining the payments to the players not disclosed to us," he said.

"It was through this system that they were able to attract and retain some of the biggest names in rugby league.

"The results of their practices on the field speak for themselves."

John Hartigan, chairman and chief executive of News Limited, who own the Storm, said his organisation was totally unaware of the situation and he felt sick after learning of it.

Hartigan said News Ltd had referred the matter to the police. He said his organisation intended to help clean up the club and remained committed to both the Storm and rugby league in general.

"This club has had a couple of rats in its ranks and it's my intention to root them out and try to rebuild a great club," he said.

Hartigan released a statement saying News would take a range of actions on top of the NRL's sanctions.

They include the appointing of accounting firm Deloitte to conduct a forensic audit of the club's accounts and financial affairs and standing down two senior staff still employed by the club who were believed to be involved in the deception pending the outcome of the audit.

News has also hired respected rugby league administrator Frank Stanton to move in as caretaker chief executive of the Storm.

"I don't think there will be a league fan anywhere who is not outraged by what appears to be a highly-orchestrated, deeply deceptive fraud in which there was systematic and deliberate concealment of unlawful payments to certain players over an extended period," Hartigan said.

Hartigan also believed the full extent of the fraud had not yet been uncovered.

He said the deception had been concealed from News Ltd.

News Ltd have a condition that clubs must regularly verify in writing that their contractual obligations under the salary cap have been complied with.

"These assurances were given but they were not true," Hartigan said.

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