But he has denied tabloid newspaper allegations that he took and dealt hard drugs.

The Rugby Football Union made the announcement at Twickenham after a three-hour meeting with the Wasps star at a secret location in London on Monday.

The BBC's Neil Bennett: "He claims to be the victim of an elaborate set-up"

The 26-year-old told the RFU he would be withdrawing from the England squad to tour Australia this summer, in the wake of tabloid newspaper reports at the weekend.

Leicester lock forward and British Lions skipper Martin Johnson has been appointed England captain until the end of the Rugby World Cup this autumn.

Dallaglio "categorically denied" the principal claims in the News of the World that he had dealt in drugs, including cocaine and ecstasy.

In a statement he added that "the circumstances in which the supposed admissions were obtained amounted to an elaborate set-up".

RFU Chairman Brian Baister: "The RFU has accepted his decision and the reasons behind it"

But News of the World editor Phil Hall said: "We stand by our story.

"Lawrence Dallaglio is damned in his own words and frankly, we are amazed at his denial."

The RFU has launched an immediate investigation into the affair.

England coach Clive Woodward: "I hope he plays for England again very shortly"

Any disciplinary action against Dallaglio would be considered only when the inquiry has been completed, RFU chairman Brian Baister said.

He added: "Lawrence's future with England will of course depend entirely on the findings of that investigation."

Coach Clive Woodward (right) is backing Dallaglio to return

Dallaglio, who will be holding a news conference on Tuesday morning, has provided the authorities with blood and urine samples and the RFU announced that every member of the touring party would also be tested for drugs.

England coach Clive Woodward, who was among the panel of six senior RFU figures who met Dallaglio, said he was "bitterly disappointed" for the player and his family but was confident he would be "proved innocent" by the investigation.

Setback

Woodward admitted it was a "setback" for the team, but he has not ruled out the possibility of Dallaglio rejoining the tour.

BBC Rugby Correspondent Ian Robertson: "This was definitely not an admission of guilt"

"It's up to myself and senior members of the team to move things along," he said.

"I hope Lawrence rejoins the team very quickly. It would have been impossible for him to join the tour - he wanted to stay and get this sorted out."

Fran Cotton, manager of Team England who led the British Lions tour of South Africa in 1997, welcomed the appointment of Johnson as Dallaglio's successor.

"We are very fortunate to have someone like Martin to call on. As Lions manager he had my full confidence and he delivered on that confidence."