The 24-year-old was expected to leave at the end of the Super Rugby season to take up a three-year contract with the Sale Sharks, but he was let go early, the Herald Sun reported.
Cipriani, who has played seven Tests for England, has been under pressure to hold down the flyhalf spot for the Rebels since the arrival of Wallaby James O'Connor from the Force.
Reports said that with his form waning and believing his motivation was gone, the club, which was not immediately available for comment, decided to pay out Cipriani's contract.
The former Wasps playmaker was once regarded as the heir apparent to Jonny Wilkinson when, in his first Test start at No 10, he produced a commanding display in a 33-10 win over Ireland at Twickenham in 2008.
But his fledgling international
career has been blighted by injuries and his attitude has also been
called into question after several training ground spats.