Larkham will relinquish his role with the Brumbies at the end of next season
Larkham, who joined the Wallabies coaching set-up under Michael Cheika in February last year, will relinquish his role with the Brumbies at the end of next season, the ARU said.
The 102-Test former Australia fly-half is now committed to the Wallabies until the end of the 2019 Rugby World Cup in Japan.
Larkham, 42, said he was looking forward to continuing to work with the young Wallabies backline, as well as the next crop of players coming through the ranks in Super Rugby.
"I have really enjoyed working with this current Wallaby group, as well as the national coaching group," he said in a statement.
"I hope we can continue to grow to be where we know we can be, and I'm looking forward to being part of that."
Larkham, who has led the Brumbies to the Super Rugby finals in each of his three seasons at the helm in Canberra, added that he was committed to helping the club transition to a new head coach for 2018.
"It will be very tough to leave but I will continue to be based in Canberra and involved with the Brumbies," he said.
Cheika said: "Stephen is on his way to becoming a world class coach and I know he is very passionate about his coaching and the Wallaby jersey.
"Having coached both last year (a Super Rugby team and the Wallabies) I know it's a difficult task and I'm pleased for Stephen that he has sorted out his future and I am pleased that he's going to continue with us beyond this year."