The NSW Rugby League has demanded the ARL Commission pay their funding in full and retract claims the state body breached its constitution in February's controversial election.
In another significant develop in the six-week war between the game's governing body and its most powerful state, the NSWRL slammed the ARLC and their investigation into the organisation.
In a strongly-worded statement on Friday, acting chairman John Anderson claimed an ARLC letter dated April 5 criticising the NSWRL and threatening a withdrawal of funding was a breach of the two parties' agreement.
The drama comes after Nick Politis and George Peponis quit the NSWRL board in February when Cronulla CEO Dino Mezzatesta was denied the right to run for election due to a perceived conflict of interest.
Peter V'landys and his ARLC then launched an investigation into the election, before on Wednesday demanding it be re-run or else more than $20 million of annual funding that is paid monthly would be gone.
"The NSWRL rejects the ARLC's allegations, that the NSWRL has in any respect breached the terms of its Services Agreement ... between the ARLC and the NSWRL," Anderson said in the statement.
"The NSWRL is plainly and obviously not in breach of the Services Agreement, either as contended by the ARLC or otherwise.
"Further, the NSWRL is not in breach of any other contract or agreement between it and the ARLC."
Anderson claimed funding was due to be paid to the NSWRL on Friday, and demanded it land in their accounts by Monday.
Removal of funding would potentially impact grassroots football, but the ARLC would likely instead pay directly to regional and metropolitan areas for their competitions and programs.
"Any failure by the ARLC to pay funding to the NSWRL pursuant to the agreements between the two parties would constitute a breach of those agreements," Anderson said.
"The NSWRL has formally demanded that the ARLC pay the whole of the funding amount ... without any deduction or set-off, by no later than 4pm on Monday, 11 April."
The situation could also impact on the NSW State of Origin teams, which are run by the NSWRL.
The dispute comes as talk continues around a national reserve grade competition, with the NSWRL currently running the NSW Cup.
