The former Australia Test threequarter, who spent four seasons in Super League with the Wolves, was close to quitting the game earlier this year when he contracted an infection of the bone and was told he faced up to 18 months on the sidelines.
He recovered after undertaking a strong course of antibiotics but, in his comeback game for feeder club North Sydney at the weekend, King suffered a break in the same arm he injured playing for Souths in the last match of last season.
King, who turns 33 in August, has been told he will miss the next 16 weeks.
"It's a tough situation for Kingy as he has worked extremely hard to put himself into a position to make his return last weekend," Rabbitohs coach Michael Maguire said.
"Kingy is the ultimate professional and we know that he will do everything he can, in conjunction with our medical team, to return from this injury before the end of the season."
King has made 111 appearances in the NRL for the Rabbitohs and Melbourne since making his debut in 2003 and won the Challenge Cup with Warrington in 2009 and 2010. He was also named in the 2010 Super League Dream Team.