Israel Folau's three-year recommitment to the Wallabies and NSW Waratahs has the Australian Rugby Union talking tough, declaring a commercial victory over the NRL.

Much like Folau does on the field, the ARU have done their fair share of fending off rivals recently, with the star fullback believed to have been in huge demand from French rugby and NRL clubs.

The 26-year-old agreed to a flexible contract which allows him to play overseas outside of the Super Rugby season and Wallabies Test commitments, with the deal announced on Wednesday.

The ARU's Rob Clarke, who is the general manager professional rugby, marketing and operations, said it was a blow to rugby league.

"Most definitely ... you only have to read the media everyday to see how sought after Izzy is. Not just as a player, but as an excellent ambassador for the game as a young man," Clarke said.

"I think from a commercial point of view, it's a wonderful windfall for rugby and hopefully for Izzy as well."

Former NRL superstar Folau, who joined the rugby ranks in 2013 after a brief and financially beneficial stay in AFL, rejected suggestions he'd simply taken the biggest offer on the table.

"There was a number of things I had to consider to make the decision," Folau said.

"First and foremost, was how I felt on the footy field. I really enjoy playing the game and that's why I decided to go another three years.

"The community (rugby) have embraced me and that's something that I've really enjoyed and I'm looking forward to continuing that over the next three years."

Folau, who had four NRL seasons from 2007 at Melbourne and Brisbane, appeared to be headed back after quitting AFL club Greater Western Sydney in 2012. He was set to join Parramatta, but the deal hit salary cap issues and he was picked up by the ARU.

Folau admitted there were plenty of options for him, but didn't get too caught up in thinking about a return to rugby league.

"Throughout the whole time, I let my management team look after that. In the end, it came down to what I really enjoyed and that's playing the game and what it brings on and off the field," he said.

Wallabies coach Michael Cheika was thrilled to see Folau stick around, but admitted he never thought he would leave.

"I've known the intent has been there for a while, so it was pretty easy to stay quiet about it," Cheika said.

"These guys are men of their word, when they say they are doing something, Israel is definitely going to follow that through."

Folau said the overseas side of his contract hasn't been sorted yet, Japan the expected off-season destination.

"My management are working through it at the moment, but my priority was to make sure that my Waratahs and ARU stuff was sorted first." - AAP