Bristol's director of rugby, Bob Dwyer, the former Wallabies coach, said: "The problem for us was that Tim played such an outstanding game against England that the Australians realised he was too good to lose.
"I've had a number of conversations with him in the last few weeks, and I'm certain Bristol would have been the club he'd have come to if he'd decided to move to England.
"The fact is, he's on top of his form now and, as far as I can see, he could play for the national team for a good few years."
Horan added: "I've only just turned 29 and I still believe I have a lot to offer the game in Australia. I still have a strong desire to play for the Wallabies and Queensland, and now I can put all my energies into contributing to successful Tri-Nations and World Cup campaigns for the Wallabies."
Saracens have completed the signing of Bedford's Scotland lock Scott Murray as the Watford club continues to cram Test recruits into their squad. Murray, the player of this year's Five Nations, has won 12 Scotland caps and will team up with England's Danny Grewcock in a powerful second row.
"When deciding my future, I wanted to make sure of a club that would help me keep developing as a player," said the 6ft 6in Murray.
"It is important to be going forward and Saracens is a club that can offer me the chance to play alongside world-class players and compete in the European Cup.
"When I played against Saracens at Christmas, the atmosphere at Watford was amazing and the game was staged on one of the best pitches I have played on."Reuse content