The 32-year-old Latham, who has been courted by a number of overseas clubs, would be tied to the Wallabies until 2010 should he agree terms with the ARU.
"We believe the offer we have put to Chris is a competitive one and we are hopeful it will be accepted," the ARU's high performance unit manager Pat Howard said.Â
"We understand Chris has been fielding some very lucrative offers from rugby clubs in the UK, but we are very keen to see him continue his representative career in Australia and hope this new two-year deal convinces him to stay."
Latham played a major role in Australia's World Cup campaign, despite suffering a serious knee injury at the start of 2007.
Latham made his debut for club and country in 1998, and rose to the top in 2006 when he was awarded the John Eales medal.