Controversial Wallaby Quade Cooper has settled his differences with the Australian Rugby Union (ARU) by signing a new two-year deal on Friday.

Cooper had earlier rejected an incentive-based contract, which was offered after a turbulent few months during which he criticised the "toxic" environment within the Wallabies and said his rugby career was "on hold".

But the ARU said the flyhalf, capped 38 times for the Wallabies and based with the Reds Super Rugby side, had re-signed through to the end of 2014.

"It's a very happy moment, to be able to continue my career with the Reds and hopefully the Wallabies is pretty exciting," Cooper said.

"Now I can concentrate on my footy career and my upcoming boxing fight."

The deal ends uncertainty over Cooper's future, with his manager saying last month that negotiations with the ARU had ground to a halt and the player would make his boxing debut in the new year.

The 24-year-old had signed a three-year contract with the Reds earlier in the year, but this was contingent on him holding an ARU contract which was due to expire this month.

As negotiations stalled and speculation mounted that he would join a French side, Cooper announced he was preparing for a fight on February 8 on the undercard of a Sonny Bill Williams contest.

Asked how seriously he had considered leaving rugby, Cooper said: "It wasn't a matter of walking away.

"I expressed my desire to continue to play rugby, but there was no contract at that stage so I had to continue on and deal with what I had."

Reports said the new ARU contract, while worth around Aus0,000 (US0,000) per year, was close to the incentive-based one he initially rejected.

That offer came after Cooper hit out on social media in September about the "toxic" environment at the Wallabies and the defensive style of coach Robbie Deans.

Cooper said he would "of course" be happy to play under Deans again.

Queensland Rugby president Jim Carmichael said the new deal was not as much a financial decision as about "getting the emotional piece right".

"The ARU has shown great support to bring this to a point where we have the right decision for the game, one of rugby's real talents and Quade's future," Carmichael told Brisbane's Courier Mail.

"Where there might not have been trust and understanding a few months ago, there has been positive dialogue and everyone working towards the same thing."

Cooper, who has also been injury plagued for much of this year, said he was confident he would be in peak physical condition and "primed to play the best rugby in my career" by the start of the 2013 season.