Melbourne - Mediation between Rugby Australia and fallen star Israel Folau ended without agreement Monday, but talks will continue as the two sides seek to avoid a court trial over his sacking for anti-gay comments.

Stridently Christian Folau was fired in May for "high-level" misconduct after posting on Instagram that "hell awaits" gay people and others he considers sinners.

The 30-year-old former Wallabies full-back is demanding Aus$14 million in compensation, claiming he was unlawfully dismissed under legislation that disallows sackings because of a person's religion.

The governing body insists his termination was purely contractual.

A trial has been set for February unless court-ordered mediation in Melbourne is successful.

The two sides spent the day locked in negotiations without resolution, but Rugby Australia said talks would resume on Wednesday.

Earlier in the day, Rugby Australia chief Raelene Castle said she was keen for a "sensible" settlement.

"Israel admitted he's caused harm with his comments and stated he would not curb his social media use and would post whatever he likes whenever he feels the need to share his view," she told reporters outside the courtroom.

"But we come here today with a genuine desire to find a settlement that is sensible and reasonable so that we can return all of our focus and resources to growing the game of rugby."

She added that Rugby Australia had received a lot of support for their stance.

"It is these messages from members of our community and the wider sports community that leaves us in no doubt that we are doing what's right," she said.

Folau has been backed by prominent conservatives and the Australian Christian Lobby raised more than Aus$2 million in just two days to help pay his legal fees.

He said in a video message on his website Monday that he wanted "the truth" to be upheld.

"I understand that not everyone shares my faith and some find it difficult to reconcile with their own beliefs," said Super Rugby's record try-scorer, who entered the court with his netballer wife Maria.

"I want to be clear that I only share passages from the Bible as a gesture of love."

He added that he was praying that God "watches over us, so that both parties might realise the courage to uphold the truth".

Folau was originally seeking Aus$10 million for lost sponsorships and earnings, but boosted that by $4 million in an updated statement of claim last week, which if successful could plunge Australian rugby into financial difficulties.