Murray is currently training with Scotland for the World Cup

The 31-year-old has agreed to join French club Montauban after this year's World Cup and therefore was not due to play for Edinburgh again.

With the prospect of receiving no wages until November, Murray is expected to challenge the decision.

Murray, who joined Edinburgh from Saracens in 2002, is Scotland's record caps holder, with 83 appearances.

The capital club have been involved in an acrimonious row with the Scottish Rugby Union.

Edinburgh claim they are owed Magners League and Heineken Cup fees and the dispute is heading for the courts.

Players can't embarrass us and can't make up their own rules Edinburgh owner Bob Carruthers

And, at the height of the ugly rift, Edinburgh withdrew 12 players of their players from Scotland's World Cup training squad, inlcuding Murray and Paterson.

The club have refused to confirm that they have now terminated Murray's contract.

But owner Bob Carruthers stressed that everyone at the club must play by the same rules, whether on duty for the capital team or Scotland.

"We can't allow people to be free to do what they like when they are employees of Edinburgh Rugby," he told the Edinburgh Evening News.

"They can't embarrass us and can't make up their own rules. Sometimes you have to be tough to be fair."

Carruthers has previously made clear his dismay at Edinburgh having to pay their Scotland players during their time away with Frank Hadden's team.

MY SPORT: DEBATE Who do you think is in the right - Scott Murray or Edinburgh?

The SRU is entitled to call up Edinburgh players for international training sessions at any time.

But Carruthers' club denied Hadden 12 Scotland players for a week earlier this month.

That controversial move occurred while the SRU and Edinburgh were in the early stages of their public row over the hefty six-figure match fees payment that Carruthers insists his club are owed.

Edinburgh this week lost the services of former skipper Chris Paterson, with the full-back moving on to Gloucester.

Established internationals Simon Taylor, Rob Dewey and Dougie Hall have also moved on this summer.