Sonny Bill Williams

RNZ reports New Zealand suffered one of the biggest upsets in sevens history when they were beaten 14-12 by Japan.

In a double blow for the team Sonny Bill Williams has been ruled out of the tournament with a partial Achilles rupture. He has been replaced by Sione Molia.

Joe Webber also left the field with a suspected dislocated shoulder.

The New Zealanders struggled to get possession in the first half of the pool match against Japan - with the score 7-7 at half time - and Japan defended well after the break.

Williams is set to return from the Rio Games the week of the All Blacks second test against the Wallabies in Wellington on the 27th August.

Williams is joined in the midfield by Ryan Crotty, Malakai Fekitoa and George Moala, while Seta Taminivalu, who made his debut against Wales, misses out.

Williams, who is chasing an Olympics gold medal with the New Zealand sevens team this season, made the announcement at a NZR press conference in Auckland.

All Blacks coach Steve Hansen said it was great news that Williams had committed to New Zealand through to the next Rugby World Cup.

The Wellington-based national body is yet to confirm the New Zealand Herald's weekend revelation that Williams will shun the year-to-year contracts he has signed most of his career for a three-season stint with NZR.

But Umaga's moves - including a quick trans-Tasman visit to meet Williams' controversial agent Khoder Nasser, rather gives the game away.

There could be an announcement on Williams' New Zealand future, including which Super Rugby franchise he will play for, as early as tomorrow or Thursday.

Williams confirmed the sad news on Twitter, posting an image of him holding his grandmother's hand tightly.

He wrote: "Last night I lost one of my most loved, my nana. Such a beautiful soul may the most high have mercy on her Duas pls.

"It feels like I'm in politics right now," he laughs.

The superstar athlete yesterday shared some of the struggles he faced as a young Pasifika sportsman coming through the ranks - and what other Pacific youth could learn from those experiences.

Pita Ahki also returns to the side after last playing for New Zealand at the Commonwealth Games in Glasgow in 2014. He was also a member of the 2013 World Cup sevens winning side.

Coach Gordon Tietjens said it was a tough selection after yesterday's trial.

Coach Sir Gordon Tietjens said in a statement he had chosen to rest Williams, following "pleasing" performances at tournaments in Wellington and Sydney, both won by New Zealand.

Tietjens also left out experienced back Sherwin Stowers when reducing his 14-strong travelling squad to 12 ahead of the three-day tournament starting on Friday.

The Daily Telegraph reports the National Rugby League club has met with Williams' agent Khoder Nasser in the past week and will attempt to lure the headline grabbing All Black midfielder back to Bondi Junction with a lifetime contract.

Roosters boss Nick Politis wants Williams wearing a tri-colours jersey as soon as this year — and he's prepared to offer him a multi-million-dollar lifetime contract to make it happen.

Williams has been included in the New Zealand squad to play in Wellington this weekend, a strong pointer he will also feature in the inaugural Sydney 7s world series leg on February 6-7 at Allianz Stadium.

The All Blacks' World Cup champion has taken a season off Super Rugby to seek selection for the Rio Olympics, and his new coach, Sir Gordon Tietjens, says Williams is ahead of schedule in his transition to the seven-a-side game.