The feud between the state and national bodies has intensified this week, with the ARL Commission issuing a deadline of Friday to resolve the situation.

It comes six weeks after Nick Politis and George Peponis quit the NSWRL board, furious Dino Mezzatesta had been ruled ineligible to run as a director due to a conflict of interest as Cronulla chief executive

The drama prompted the ARL Commission to launch an investigation through prominent lawyer Bret Walker, before claiming the NSWRL's decision was unconstitutional while issuing a list of demands.

Included in those are that the elections for the two metropolitan seats are held again, with Mezzatesta allowed to run for a seat on the board.

In turn, it would leave incumbent director Geoff Gerard needing to be voted in again, after originally holding his spot unopposed in February after Mezzatesta's ineligibility.

Independent directors would also then be reappointed by the board, while the position of chair - previously held by Peponis - would also then be decided,

If the NSWRL does not announce those actions by Friday at 4pm, ARL Commission chairman Peter V'landys has threatened to pull funding for the organisation.

The remaining NSWRL board members have long maintained they followed the correct legal advice in not allowing Mezzatesta to run, and believe the current dispute is a matter of differing legal opinions.

They had just last week called an emergency general meeting for April 28, in a bid to elect a second metropolitan director to sit beside Gerard in the role once held by Politis.

Instead, they will now again meet with the organisation's legal advisor on Thursday to discuss whether to press ahead with that plan or accept the NRL's demands.

It's understood the state body receives around $21 million a year in funding paid monthly, meaning any cut would have an immediate impact and flow-on effect.

If cut, it's expected the ARLC would instead set up funding direct to regional and metropolitan areas which rely heavily on the financial backing for competitions and programs.

It also comes amid talk of a national reserve grade competition, with the NSW Cup currently run by the NSWRL.

The NSW State of Origin teams are also run by the NSWRL, and any funding cuts would have an impact on the programs.

There is a possibility that the ARL Commission could take control of the running of the teams, potentially creating a headache for Blues coach Brad Fittler whose contract with the NSWRL extends beyond the Origin period.

Australian Associated Press