Dual international Israel Folau is tantalisingly close to signing a two-year deal with Australian rugby after agreeing to terms with the NSW Waratahs.

It is understood the Wallabies winger, who made his name in rugby league and experimented with AFL before switching to rugby union eight months ago, has agreed to play two more seasons under Michael Cheika at NSW and is now waiting for the Australian Rugby Union to come to the party before the deal is made official.

The Waratahs and the ARU, who both stump up funding for Wallabies players, were hoping to have matters finalised soon after the British and Irish Lions series, in which Folau made his Test debut in stunning fashion. But as time drags on it appears increasingly possible Folau could go into the Wallabies' Rugby Championship campaign under new coach Ewen McKenzie next month without his future locked down.

Folau was spotted in the company of departing Canterbury chief executive Todd Greenberg at the State of Origin decider last week and was as recently as yesterday linked to NRL side Manly after he was spotted training on the Northern Beaches.