O'Connor was axed from Australia's Rugby Championship squad, missing the final two games against South Africa and Argentina, who they play in Rosario on Sunday (NZT).
The Australian Rugby Union said O'Connor needed to make significant changes to his behaviour.
"We have determined that James must make some changes with respect to his off-field responsibilities and ensure that this approach is consistent with the values of our game,'' said ARU chief executive Bill Pulver.
"We are hopeful that James will stay in Australian rugby and play in next year's Super Rugby competition and that he sees this as an opportunity to re-focus his attitude.''
Dependent on his behaviour O'Connor, who has played 44 Tests, could be considered for a national contract in 2015.
O'Connor, who was cut from the Melbourne Rebels and is in talks over a Super Rugby contgract with the Perth-based Western Force, issued a statement.
"I want to apologise for any issues that I have caused and I want express my respect for my teammates, the Wallabies and the jumper,'' he said.
"There is nothing more important and rewarding to me than representing my country.
"I want to say again that I do appreciate the impact that some of my actions have had on my team and the sport in general.
"I recognise that given my actions and the circumstances it is best for the team and myself to go in different directions in the short term. ''
I remain focused on earning my place back with the Wallabies and will be looking for the right opportunity to do this.''
The Australian Rugby Union said O'Connor needed to make significant changes to his behaviour.
"We have determined that James must make some changes with respect to his off-field responsibilities and ensure that this approach is consistent with the values of our game,'' said ARU chief executive Bill Pulver.
"We are hopeful that James will stay in Australian rugby and play in next year's Super Rugby competition and that he sees this as an opportunity to re-focus his attitude.''
Dependent on his behaviour O'Connor, who has played 44 Tests, could be considered for a national contract in 2015.
O'Connor, who was cut from the Melbourne Rebels and is in talks over a Super Rugby contgract with the Perth-based Western Force, issued a statement.
"I want to apologise for any issues that I have caused and I want express my respect for my teammates, the Wallabies and the jumper,'' he said.
"There is nothing more important and rewarding to me than representing my country.
"I want to say again that I do appreciate the impact that some of my actions have had on my team and the sport in general.
"I recognise that given my actions and the circumstances it is best for the team and myself to go in different directions in the short term. ''
I remain focused on earning my place back with the Wallabies and will be looking for the right opportunity to do this.''
-AAP