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.
AUSTRALIAN Rugby Union chief executive John O'Neill has dismissed suggestions a personal vendetta is behind the sacking of star winger Lote Tuqiri, as rival Rugby League clubs line up to bid for his services.
O'Neill again refused to reveal why Tuqiri was sacked but told a packed press conference today no police investigation was involved.
The ARU boss said revelations Tuqiri’s camp plan legal action against the governing body meant he could not discuss the matter further. But he bristled at suggestions he had a personal issue with Tuqiri, saying it was “ridiculous” to imply that was behind the axing.
Broncos join the queue for Lote
He added members of Tuqiri’s camp were free to discuss the mysterious case if they wanted. O’Neill confirmed he had served Tuqiri with a letter in 2007, warning him about the possible consequences of further bad behaviour following several alcohol-related incidents.
Gallery: The life and crimes of Lote Tuqiri
Tuqiri was once the most dominant rugby league winger in the NRL, winning premierships with Brisbane, Origins with Queensland and Tests for the Kangaroos. Now the tantalising prospect of him returning to rugby league is very real, with Parramatta last night becoming the first club to publicly declare their intention to sign the discarded ARU star. The Eels, though, will have to compete for Tuqiri's signature with the Gold Coast Titans, who have opened the door for the former Bronco to return to the sunny climes of Queensland.
"We'd be mad not to talk to him - Lote is a marquee player and we need an outside back," said new Eels football club director Brett Kenny.
"Lote is quality, who would also help us with attendances, marketing and merchandise.
Battle Royale: Lote in legal fight over sacking
"He would be a player who would lift the young kids coming through at Parramatta. "He's not that old, either. I reckon he would have another three years left in him." David Campese's column: Tuqiri axing a crying shame
Titans chief executive Michael Searle also expressed an interest in Tuqiri. "We couldn't make him an offer that his lifestyle would be accustomed to but the cap is flexible over the years," Searle said. "We have a little in the cap for next season but not a lot. Analysis: Warning signs were all there
"It would depend on Lote's expectations. It would be great to have him back in rugby league."
Tuqiri may still be able to play this season despite not being registered with the NRL before the June 30 transfer deadline.
"The rule states that under exceptional circumstances, a player can be registered after June 30," NRL chief executive David Gallop said.
"We don't know enough about it to make a decision just yet."
Australian Rugby Union boss John O'Neill said today the termination of star winger Lote Tuqiri contract was not due to any police matter.
O'Neill fronted the media but remained tightlipped, citing legal reasons.
O'Neill read a brief statement before taking questions.
"Cleary the decision to terminate a contract is one that requires a lot of consideration. We gave that consideration and reached the conclusion with our eyes wide open," O'Neill said.
O'Neill confirmed police were not involved and said he had consolidated with Tuqiri's Super 14 club the NSW Waratahs and they had agreed with the decision.
He said the winger's massive salary was not a consideration.
Tuqiri was targeted heavily by Souths in 2007 when he was tossing up whether to return to rugby league or sign a bumper new deal with the ARU.
He chose the latter - for a reported $6 million - and several NRL clubs claim they simply could not afford the former Brisbane Bronco and Kangaroos winger.
"We are on our cap this year and just about on our cap for next season," Brisbane CEO Bruno Cullen said. "We couldn't make him an offer that wouldn't be embarrassing to him."
Wests Tigers, Sydney Roosters and Souths also said they would be unable to fit Tuqiri under their salary cap for 2010.
Tuqiri played 99 games for Brisbane between 1999 and 2002 and represented the Maroons six times and the Kangaroos five times.He still holds the record for most points in an Origin match for Queensland (18) and tries in a series (five in 2002).
O'Neill again refused to reveal why Tuqiri was sacked but told a packed press conference today no police investigation was involved.
The ARU boss said revelations Tuqiri’s camp plan legal action against the governing body meant he could not discuss the matter further. But he bristled at suggestions he had a personal issue with Tuqiri, saying it was “ridiculous” to imply that was behind the axing.
Broncos join the queue for Lote
He added members of Tuqiri’s camp were free to discuss the mysterious case if they wanted. O’Neill confirmed he had served Tuqiri with a letter in 2007, warning him about the possible consequences of further bad behaviour following several alcohol-related incidents.
Gallery: The life and crimes of Lote Tuqiri
Tuqiri was once the most dominant rugby league winger in the NRL, winning premierships with Brisbane, Origins with Queensland and Tests for the Kangaroos. Now the tantalising prospect of him returning to rugby league is very real, with Parramatta last night becoming the first club to publicly declare their intention to sign the discarded ARU star. The Eels, though, will have to compete for Tuqiri's signature with the Gold Coast Titans, who have opened the door for the former Bronco to return to the sunny climes of Queensland.
"We'd be mad not to talk to him - Lote is a marquee player and we need an outside back," said new Eels football club director Brett Kenny.
"Lote is quality, who would also help us with attendances, marketing and merchandise.
Battle Royale: Lote in legal fight over sacking
"He would be a player who would lift the young kids coming through at Parramatta. "He's not that old, either. I reckon he would have another three years left in him." David Campese's column: Tuqiri axing a crying shame
Titans chief executive Michael Searle also expressed an interest in Tuqiri. "We couldn't make him an offer that his lifestyle would be accustomed to but the cap is flexible over the years," Searle said. "We have a little in the cap for next season but not a lot. Analysis: Warning signs were all there
"It would depend on Lote's expectations. It would be great to have him back in rugby league."
Tuqiri may still be able to play this season despite not being registered with the NRL before the June 30 transfer deadline.
"The rule states that under exceptional circumstances, a player can be registered after June 30," NRL chief executive David Gallop said.
"We don't know enough about it to make a decision just yet."
Australian Rugby Union boss John O'Neill said today the termination of star winger Lote Tuqiri contract was not due to any police matter.
O'Neill fronted the media but remained tightlipped, citing legal reasons.
O'Neill read a brief statement before taking questions.
"Cleary the decision to terminate a contract is one that requires a lot of consideration. We gave that consideration and reached the conclusion with our eyes wide open," O'Neill said.
O'Neill confirmed police were not involved and said he had consolidated with Tuqiri's Super 14 club the NSW Waratahs and they had agreed with the decision.
He said the winger's massive salary was not a consideration.
Tuqiri was targeted heavily by Souths in 2007 when he was tossing up whether to return to rugby league or sign a bumper new deal with the ARU.
He chose the latter - for a reported $6 million - and several NRL clubs claim they simply could not afford the former Brisbane Bronco and Kangaroos winger.
"We are on our cap this year and just about on our cap for next season," Brisbane CEO Bruno Cullen said. "We couldn't make him an offer that wouldn't be embarrassing to him."
Wests Tigers, Sydney Roosters and Souths also said they would be unable to fit Tuqiri under their salary cap for 2010.
Tuqiri played 99 games for Brisbane between 1999 and 2002 and represented the Maroons six times and the Kangaroos five times.He still holds the record for most points in an Origin match for Queensland (18) and tries in a series (five in 2002).
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