Wales's two-month pursuit of Graham Henry ended yesterday when the Auckland and New Zealand A coach agreed to become their eighth national coach in 10 years.

The 53-year-old Henry has signed a £1.25 million five-year contract with the Welsh Rugby Union, even though he was warned by the New Zealand Rugby Football Union that he would never coach the All Blacks if he allied himself with another union.

Henry was the pretender to the throne of the New Zealand coach John Hart, whose position has become less secure this month with successive Tri-nations defeats by Australia and South Africa.

Wales had hoped to sign Henry two weeks ago, but they became embroiled in a contractual dispute with the New Zealand RFU.

The WRU has appointed Henry at a time when the Welsh game is in a parlous state off the field as well as on it. "There is a big danger that Henry will not make much difference, not because of any shortcomings as a coach but because the problems facing Welsh rugby are so deep-rooted," said John Ryan, the national coach in 1988-90. "It will be a culture shock for him: he is used to having players whose fitness and skills lack nothing but in Wales he will find there is a stark difference in the attitudes of players from those in the southern hemisphere.

"The Wales national team does not come first, as Henry's predecessor Kevin Bowring found. Unless that changes, the name of the coach does not matter, nor how much he is paid. Henry needs to be in charge of Welsh rugby, not just the national side."

The union's secretary Dennis Gethin said it was "one of the most important days in the history of Welsh rugby - I hope that in years to come, people will look back on this as a watershed".

Gethin's theme was taken up by the WRU rugby director Terry Cobner, Henry's nominal superior who will be earning four times less than the New Zealander when the coach officially starts work at the end of August. "Graham Henry is a winner who does not suffer fools," said Cobner. "We are looking for a measure of respectability and then significant improvement."

Henry arrives in Wales tomorrow for a series of meetings and on Sunday will address the coaches of the eight Premier Division clubs, if they all turn up.

"It was a difficult decision," Henry said. "My heart said stay in New Zealand but my head told me not to be stupid otherwise I would end up a grumpy old man in 18 months. Wales is a country with a fantastic rugby tradition. The problem with Welsh, and British, rugby is structural. I will be looking to address that."

Australia lost their most potent attacking back with the withdrawal of winger Ben Tune yesterday but gained the experience of Jason Little for Saturday's Tri-Nations international against New Zealand in Christchurch.

The 27-year-old Little, for so long a fixture of Australia's midfield with 48 Tests before supplanted by Daniel Herbert, was yesterday called into the starting side to replace Tune, who was ruled unfit with a knee injury.

Australia: M Burke, J Little, D Herbert, T Horan, J Roff; S Larkham, G Gregan; T Kefu, D Wilson, M Cockbain, J Eales (capt), T Bowman, A Blades, P Kearns, D Crowley. Reserves: C Whitaker, N Grey, D Smith, W Ofahengaue, O Finegan, G Panoho, J Paul.