O'Connor was effectively sacked by the Australian Rugby Union (ARU) last month when he had the remaining months of his contract terminated and was told he would not be eligible for a lucrative top-up deal until 2015.
It is understood the 44-Test back is yet to sign a deal with a European club, but his upcoming move all but ends his hopes of playing at the 2015 Rugby World Cup.
Under current ARU regulations, overseas-based players are ineligible to play for the Wallabies.
The European club season runs through to June, meaning if O'Connor signs any more than a one-season deal he will not be available for the next World Cup.
O'Connor, 23, was cut loose by the Melbourne Rebels at the end of the 2013 campaign and no other Australian franchise opted to pursue the talented utility.
"We have been informed by James directly that he intends to continue his playing career in Europe for the time being," Western Mark Sinderberry, Australia Rugby Union (RugbyWA) chief executive officer, said.
"The Western Force and RugbyWA wish him well in these endeavours.
"The Western Force has laid strong foundations of standards and values - particularly around earning respect - and our discussions with James included on- and off-field programs that we believed could assist him in becoming the player he aspires to be and to develop himself as a person.
"James has made the decision that is right for him at this point in his playing career and the club remains open to recommencing these discussions again in the future if James wishes to return to Australian rugby."
A number of off-field issues have hampered O'Connor's progression, the most recent of which saw him prevented from boarding a flight by Australian police who reportedly believed him to be intoxicated.