Wallabies coach Eddie Jones has warned that Australia is likely to lose more players to rich overseas clubs following New Zealand's refusal to expand the Super 12.

Australian and South African officials were furious after the New Zealand Rugby Football Union ruled out an expansion of the competition despite having agreed to a Super 14 competition last July.

The NZRFU said it would only agree to a new competition if three conditions were met but both South Africa and Australia called their demands unreasonable.

Jones said Australian rugby was now going to suffer and said many of those likely to play in the fourth Super 12 team would now join the exodus of leading players to Europe.

"That's always a chance and there are definitely clubs in Europe who are after good players and at the moment Australian players are certainly very popular in the international market," Jones said.

"It's something we're going to have to look at. There are always going to be players going (overseas) because we're never going to be able to match in some cases the money for players that are just outside Super 12.

"What we've got to do is be very careful in our recruitment and make sure we keep the players we need to keep."

New Zealand's decision meant any expansion of the popular tournament would now not take place until 2005 when SANZAR renegotiated its broadcast rights deal with backer News Limited.

Jones said an expanded Super 12 would have been good for the development of rugby in general and not just for Australia.

"It's certainly disappointing. What we need to do now is just regroup and look at the best way forward for Australian rugby."

Jones said the lack of a fourth Australian Super 12 would make no difference to Australia's 2003 World Cup campaign.

"Even if a Super 14 side was approved, it was looking more at 2004 than 2003 and I think we're seeing the benefits now of having extended squads with some of the performances with some of the younger fellows in the World Sevens at Brisbane," Jones said.