Rugby Australia has apologised to Israel Folau as part of a confidential settlement reached over the former Wallabies player's sacking.

Key points: Folau was suing Rugby Australia for $14 million over his sacking

Folau was suing Rugby Australia for $14 million over his sacking Rugby Australia and Folau have apologised to each other as part of an out-of-court settlement

Rugby Australia and Folau have apologised to each other as part of an out-of-court settlement A joint statement said Folau's controversial social media commentary was based on "genuinely held religious beliefs"

Folau's contract was terminated by Rugby Australia in May after he posted to social media that homosexuals, among others, would go to hell.

Folau then took legal action against Rugby Australia, demanding $14 million in compensation and an apology for what he claimed was unlawful dismissal.

Mediation talks between Folau and Rugby Australia began at the Federal Court in Melbourne on Monday but were suspended after 12 hours.

On Wednesday, a joint statement from Rugby Australia, NSW Rugby and Folau confirmed a settlement had been reached after talks resumed via teleconference.

"While it was not Rugby Australia's intention, Rugby Australia acknowledges and apologises for any hurt or harm caused to the Folaus," the statement said.

​"Similarly, Mr Folau did not intend to hurt or harm the game of rugby and acknowledges and apologises for any hurt or harm caused."

Folau and his wife Maria published a video on Folau's website thanking supporters and the Australian Christian Lobby for their "thoughts and prayers".

Folau said he started legal proceedings to protect the "rights of freedom of speech and religion".

"We now look forward to the Federal Government enacting the legislation necessary to further protect and strengthen these rights for all Australians," he said in the video.

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Folau 'does not condone discrimination'

Folau is a hardline Christian who also recently claimed fatal bushfires were God's punishment for legalising abortion and same-sex marriage.

He held a prayer circle with supporters outside court before talks began on Monday.

The statement said Folau's social media post "reflected Mr Folau's genuinely held religious beliefs" and he did not intend any harm or offence.

"Mr Folau wants all Australians to know that he does not condone discrimination of any kind against any person on the grounds of their sexuality and that he shares Rugby Australia's commitment to inclusiveness and diversity."

The Australian Christian Lobby, which donated $100,000 to Folau's cause and set up a crowdfunding campaign, said the case set "a clear precedent for every bureaucrat, manager, or person in a position of power, that they cannot ruin someone's career because they don't like what they believe".

"Israel Folau's case was everyone's case, demonstrated by the huge outpouring of financial support from so many Australians," it said.

But LGBTIQ rights campaigner Rodney Croome, from advocacy group just.equal, said Rugby Australia should not have had to make an apology.

"It simply applied the same codes of conduct that apply to all rugby players and should apply across all sporting codes," Mr Croome said.

Folau should instead apologise to gay Australians, many of whom grew up being told they were "sick" and "sinners", he said.

"To then be told by someone of the stature, the profile, the celebrity of Israel Folau that, again, there is something wrong with us and we are going to hell just reinforces the negative messages we have had our whole lives," Mr Croome said.

The financial details of the settlement have not been released.

Folau, a former rugby league and AFL player, last week said the Wallabies would have done better in the 2019 Rugby World Cup if he had been playing.

"I want to be clear that I only share passages from the Bible as a gesture of love," he said in a video posted on his website.

Equality Australia chief executive Anna Brown said the Folau legal settlement showed that when brought together, parties could resolve their differences.

"What it really demonstrates for us is that we don't need a heavy-handed religious discrimination bill to hand, I guess, more ammunition to religious groups and institutions and wind back rights for others," she said.