Sportal.co.nz 21.Sep.2013Getty Images
The 23-year-old will miss the Wallabies' final two Investec Rugby Championship fixtures in South Africa and Argentina after he was escorted from Perth airport in the early hours of Sunday morning.
An allegedly intoxicated O'Connor was attempting to board an Air Asia flight to Bali with his girlfriend less than 12 hours after playing in Australia's 14-13 Rugby Championship win over Argentina, but was denied entry after he became agitated over a seating dispute.
While the ARU's investigation is still ongoing, coach Ewen McKenzie has opted to stand down the 44-Test veteran until further notice.
"We won't be forced into making any decisions around his return until I'm satisfied that he can once again contribute positively to what we are trying to achieve as a group," McKenzie said.
"The reality is that representing your country is the ultimate honour but also a week-to-week proposition.
"To be selected, players must consistently do the right things on and off the field.
"We'll continue to assess James on that basis before any team decisions are made about a return."
O'Connor's latest incident comes on the back of his 4am visit to a fast-food outlet three days out from the second British and Irish Lions Test, while he also missed the bus to training and was absent from a team meeting during the same series.
A decision on the winger's future will be made when the ARU have completed their investigation into his behaviour on Sunday morning.
"My views and expectations around team culture and behaviours, along with those of his teammates, are extremely clear and it's important for the Qantas Wallabies and rugby in general to be spoken about positively for the right reasons," McKenzie said.
"James and I had a long conversation around those expectations before the tournament commenced.
"As a result, and separate to the outcomes of the current investigation, James will not be joining us in Sydney tomorrow.
"We must put the team first without any distractions hindering them during a really tough two-game tour."
Waratahs winger Peter Betham will replace O'Connor in the 28-man Wallabies squad.
McKenzie's charges will assemble in Sydney on Saturday before flying out to Cape Town ahead of Saturday's clash against the Springboks at Newlands.