The white powder allegedly found inside Perth teen's bag while in a Bali nightclub is 'not an illegal drug'.

The white powdered substance found on a young 18-year-old who was attending Schoolies in Bali is not drugs and is more likely paracetamol, Bali police have told News Corp.

Sources have also told News Corp blood and urine samples taken of Australian Jamie Murphy have tested negative for drugs.

Bali police are yet to release an official statement commenting on the reports, while Murphy is yet to be named as a suspect.

Since his arrest, police have said that if the powder does not test as drugs, the Perth teenager would not be charged with any offence.

Jamie Murphy. Via Facebook.

This young school leaver was arrested in the early hours of Monday morning for the alleged possession of drugs at Skygardens nightclub in Kuta.

Murphy, who had completed year 12 at Ellenbrook Secondary College in 2015, was on the Indonesian island for delayed Schoolies celebrations.

Security were conducting bag searches and it is claimed that inside a waist pouch he was wearing was a small plastic bag containing white powder, which Bali police believed to be heroin or cocaine, along with a mobile phone, an ATM card and a hotel room key.

Murphy - earlier in the day before his arrest. Via Instagram.

His arrest, captured by Channel Nine, shows his alarm at the discovery of the bag of drugs.

"It was not like that," he exclaimed.

"It’s not mine, I haven’t taken it, what are you doing, it’s not mine. It’s not mine."

He then told police: "I don’t do this s--t, I only drink."

"I wouldn’t do that to myself, I wouldn’t do that."

Shocked and horrified he puts his head in his hands uttering, “My God."

The talented young soccer star, who won the best league player award for an under 20s competition in Perth last month, and had trialled for A League team Perth Glory, had travelled to Bali with a group of mates arriving only on Sunday.

Murphy is a talented soccer star. Via Facebook.

Friends of Murphy’s have expressed their own shock at his arrest, saying that he had never been involved in drugs.

His soccer club, Bayswater City, extended their support for him on Facebook, writing:

“We would like to extend our support to Jamie Murphy and his family on this absolutely tragic situation. We will do whatever we can to help bring Jamie home! Anna Murphy would also like to pass on her gratitude to everyone who has contacted the Club to offer their help and support.”

Murphy's friends claim he was set up. Via Seven News.

Bayswater City soccer club president Gerry Maio told Seven News:

“He’s got a bright future in our game but most importantly, he’s a great young man.”

Kuta Police Chief Wayan Sumara said the test results on the powder, as well as blood and urine samples, could take up to three days.

“He said he got it from one of the people on the street,” Mr Sumara said.

“We suspect there is more than five grams of the substance inside the plastic bag. We are confirming what the substance is and how much it weighs exactly. ”

Jamie Murphy faces 12 years behind bars if convicted. Via Facebook.

Denpasar crime laboratory chief Kusnadi told The Australian that the packet contained less than five grams. It is reported as a significant weight as the maximum penalty for possession of more than five grams of grade-one drugs is life imprisonment.

But friends of Murphy’s have claimed he was set up with one writing on Facebook: "A big f**k you to the Australian media, you can clearly see the cocaine in the security's hand BEFORE he even opened up the bag, don't drag his name through the gutter when even the video u posted has it clearly showing a set up.”

He was arrested at the Skygarden Nightclub. Via Facebook.

Jamie’s brother, Liam, has made a public statement asking for privacy while their family deal with the authorities.

“As much as we appreciate the love and support for Jamie during this time, we respectfully request that no comments or discussions be publicly made on social media, or local media until further notice from the family” he wrote.

“Please respect our privacy as we are dealing with this now through the embassy and Australian government.”

Meanwhile, Jamie Murphy, who just two days ago had been body boarding at Kuta beach, remains in jail. Under Indonesian law, police can hold a person in custody for three days before naming them a suspect and then, if needed, can extend for a further three days.

Three days which, if convicted, might just turn into 12 years jail time.