Brian Waldron, who joined the Rebels earlier this year after being employed as CEO of Storm from 2004-2009, was labeled by his former employers as the "architect" of illegal player payments that helped the Storm win two premiership titles in the last three years.

The Storm had their 2007 and 2009 titles revoked on Thursday, were fined A$1.7 million ($1.58 million) and will not be allowed to accrue any points in the 2010 season in the harshest punishment meted out by a football code in Australia.

The Rebels, set to join the expanded Super 15 competition in 2011, had accepted Waldron's resignation, Chairman Harold Mitchell told reporters on Friday.

"I don't know whether he is the absolute center of (the scandal), that'll be for others to judge," Mitchell said.

"I just didn't want this to be a distraction in any way to what we're doing. Quite frankly I've told him to make himself scarce for a while."

The Storm were found to have committed deliberate salary cap breaches of at least A$1.7 million over a five-year period and had gone to "extraordinary" lengths to cover it up, the NRL said.

The scandal and severity of the punishment have been labeled the biggest crisis to hit the code in its more than 100-year history in Australia.

The disgraced club's acting CEO and another senior management official have already been stood down and more are expected to fall as investigations continue.

The fall-out has seen major sponsor ME Bank, an Australian lender, cut ties with the club. Skins, a sportswear maker, had also ended their sponsorship, local media reported.

Storm Chairman Rob Moodie offered his resignation to club owners News Ltd, a division of Rupert Murdoch's News Corp, and said the club could fold as sponsors seek to distance themselves.

"There's a possibility the club may fold but we have strong support from News, who want to keep rugby league alive and well in Victoria (state) and have indicated they will help the Storm rebuild," Moodie said.

Local newspapers on Friday savaged the team, who despite huge on-field success since joining the league in 1998 have struggled to maintain a foothold in Melbourne's crowded sports market, where Australian Rules football remains dominant.

"Cheats!" cried a full-page spread in Brisbane's Courier Mail. "A lifetime of effort sold for a bargain basement $1.7 million," the Herald Sun lamented in a commentary.

Storm assistant coach Robbie Kearns said the team were "shattered" and would lose players after playing out a season that would effectively mean nothing.

"By the sounds of it, we're going to lose more than a couple. They're the rules and we've got to play within the rules," he said.

Distraught fans dumped team merchandise at the club's headquarters.

"I was there for the last two grand finals ... It hurts like hell that that's been taken away from me," a fan told local television as he choked back tears.

Australian Prime Minister Kevin Rudd weighed into the debate over the severity of the penalties meted out to Storm, underlining the gravity of the scandal in the sports-mad country.

"Some Melbourne Storm fans may think it's been harsh, but you've got to defend the rules of the game," he said in a television interview.

"All Australians, whatever game they play, whatever code of football they follow, they expect the teams to play by the rules." The scandal could now engulf Australian Rules, which has largely avoided the raft of controversies that have dogged the NRL in recent years.

The Australian Football League confirmed they would look into salary cap breaches at St Kilda club, where Waldron was CEO prior to moving to Storm.

Bookmakers have reported massive betting plunges on St Kilda finishing last in the AFL league.