Palu has committed to the New South Wales Waratahs for a further season, with an option for one more.
If he sees that deal through to its conclusion, the 27-year-old would be just a season short of the 2013 Lions tour.
And as the 2009 tour proved with leading South African internationals, the lure of the Lions could well see Palu put off a big-money foreign move for another 12 months.
"I thought long and hard about it. At the end of your career, I think you want to look back and have no regrets," said Palu, who made his Australian debut in 2006 and currently has 36 caps to his name.
"If I was to go, I think I probably would have regretted that I had.
"I love playing for NSW. Obviously I've enjoyed playing for Australia. I think there's a lot of goals that I still want to pursue in rugby.
"One of them is winning a Super 14 title and trying to get a World Cup.
"I like the way this Wallabies team is moving forward under Robbie Deans. It had a big influence on my decision to stay in Australia.
"I definitely want to play at the World Cup next year because I think we've a real chance. If I didn't believe that I probably would have left.
"We'll see what contract suits me best after the World Cup but, in saying that, I could stay again. I don't know what the future holds."