The final act in the protracted and painful transformation of English rugby union from the preserve of waxed-jacketed amateurs into a fully professional business controlled by agents and lawyers took place in an English country club yesterday, when the entire England squad went on strike over a contract dispute and were ordered to pack their bags and go home.

After their coach, Clive Woodward, heard that the squad had voted unanimously to reject the latest pay offer from the Rugby Football Union, and would be withdrawing from Saturday's match against Argentina, he told all 22 players to leave the team's headquarters and to spend the night examining their consciences.

Only if they return for a training session at 11.00 this morning will they be considered for selection for the match at Twickenham, he said. If they do not, he promises to put together a side from whatever resources are available to him.

At yesterday's press conference, Woodward said he felt "betrayed" by players with whom he has worked for the past three years and who, after capturing last season's Six Nations championship, beat world champions Australia last Saturday. "The players had my full support," he said. "I don't think they were being greedy. But after seeing the offer, I can't believe they haven't accepted it." He was particularly critical of "three or four strong characters" among the senior players. Most of the squad had already left the Pennyhill Park hotel, south of London, when an ad hoc committee consisting of three senior players - the present captain, Martin Johnson, and two of his predecessors, Lawrence Dallaglio and Matt Dawson - emerged into the courtyard. There they put their side of the argument to reporters who had gathered expecting to hear nothing more exciting than Woodward's team selection for Saturday's match.

At the heart of the dispute is a disagreement over the complicated formula determining the balance between fixed match fees and win bonuses stipulated by the four-year deal. Although neither side would be precise about figures, the RFU is offering a split under which the players would earn about £65,000 for winning all this season's eight matches, plus a top-up bonus, and about £25,000 for losing them all. The players want to raise the proportion represented by the guaranteed match fee.

This income comes on top of regular salaries from their clubs, which range from about £60,000 a year for the least experienced players to perhaps £120,000 for the most senior. Added to all this, for the international players, is a system of payments for intellectual property rights - in other words, for the use of their images as part of sponsorship and advertising deals. This, the RFU say, is expected to swell the players' pot by up to £2 million over four years. Johnson read a prepared statement in which the players were highly critical of the way in which the negotiations, described as "frustrating and inconclusive", had been conducted by the "old-fashioned, patronising and arrogant" RFU, and in particular its chief executive, Francis Baron.

"The issue from the players' side is one of principle," Johnson said, "and their main drive is to bring the sport into the 21st century, and ensure that as performers they get something approaching a fair deal to bring them in line with other sports.

"Most rugby players earn a salary commensurate with many Premiership soccer players' weekly drawings, so there is no question of greed being a factor here."

The negotiations began in August, six months after the squad had put their collective financial affairs into the hands of CSS Stellar, a sports management company which also supervises the commercial affairs of the England soccer team.

Yesterday Julian Hill and Simpson of CSS were at Pennyhill Park and said that although they had indeed recommended the RFU's offer to the squad, it was the players themselves who decided to turn it down and go back in search of improved terms. The players were unhappy to be receiving a total sum equivalent to only five per cent of the RFU's receipts from internationals, estimated at £2 million a match, said the agents.

On Monday night the management board, led by the RFU's president, the former international forward Budge Rogers, met the three senior players and the men from CSS. "We spent four hours talking," Baron said yesterday, "during which we offered a number of improvements to the package. It would be an understatement to say that we were shocked when it was not only turned down but turned down with the immediate threat that they would not play for England on Saturday."

A seemingly petty incident might have concentrated the players' minds, or at least convinced them that the RFU did not have their best interests at heart. As part of the new contract package, the RFU announced its intention to reduce their allocation of free match tickets from three to two. Although the reduction was subsequently rescinded, this was probably the factor that led Johnson to refer to the board's attitude as "feudal" yesterday.

Woodward, meanwhile, has spoken of concerns that the players' clubs might be putting their spoke in as they believe they should be receiving greater recompense for the national side's use of their personnel.

"I just hope that whoever plays on Saturday gets a standing ovation from the English public," the coach said. Martin Johnson, asked if he would be returning for today's training session, answered in a single word: "No."