The 24-year-old Queensland Reds back had baulked at a revised offer tabled in late October after he was fined A$40,000 for describing the Wallabies camp as a "toxic environment" he felt was "destroying" him.
Media reports suggested it was the sort of pay-as-you-play deal that would usually be offered to those outside the top echelons of the national set-up.
After his threat to walk away, and the announcement of his boxing debut in a charity bout, a new contract was put forward which proved more acceptable.
"It's no secret that I have a strong passion and desire to represent Queensland and Australia. I love playing for the Reds and the Wallabies," Cooper, who has been sidelined by a knee injury, said.
"It's a great feeling to know that things are sorted and now I can continue to improve as a player and as a member of the Queensland Reds and the Wallabies.
"I'm confident I'll front for round one in peak physical condition and primed to play the best rugby in my career."
The fine had completed a miserable 12 months for Cooper, which started when he limped out of the World Cup with a seriously damaged knee after being labelled 'public enemy number one' in the land of his birth.
In the preceding three years, however, Cooper's incisive passing and quick feet had established him as the top flyhalf in Australia and one of the most exciting talents in rugby.
Despite his problems with the ARU, Cooper has enjoyed good relations with Queensland and had already committed to stay with the Reds until 2015 in a deal contingent on a Wallabies top-up.
Cooper will now be available when Australia host the British and Irish Lions next year.
"Agreeing to terms for a further two years provides Quade with an opportunity to take on one of the world's most iconic rugby teams," said ARU chief Matt Carroll.
"It is an opportunity I am sure he is looking forward to as a Reds player and potentially as a Wallaby."