Australian teenager Jamie Murphy insists he doesn't know how a sachet of white powder ended up in his bag in Bali because he was only "half conscious" at the time.
Tests on the powder revealed on Wednesday it was not illegal drugs, a day after Murphy, 18, was detained in Kuta on suspicion of being in possession of cocaine or heroin.
Chief of Bali police, Inspector Sugeng Priyanto, told AAP that tests done on the 1.6 grams of powder, as well as a urine test undertaken by the teenager, have come back negative.
Chief Priyanto said it is believed to be a mixture that includes painkillers and paracetamol.
"He should be released," he added.
His lawyer Dessy Widiantari told reporters he should be released either Wednesday or Thursday.
"He denied buying the powder, and says it wasn't his," she told reporters.
"He didn't know how the drugs got into the bag because he was half conscious at the time."
Kuta police chief Wayan Sumara on Tuesday told reporters Murphy "said he got it from one of the people on the street."
Murphy arrived in Bali on Sunday on what was supposed to be a holiday with friends but by the early hours of Tuesday found himself locked up after being frisked going into Sky Garden nightclub in Kuta.
Security guards found the sachet of powder in his bumbag.
He faced a maximum of 12 years in jail if the powder was found to be a prohibited drug.
"Of course he is happy (with the result) because he never felt like he owned it," Ms Widiantari said.
Murphy, she added, was doing "fine" and hoped it would all be over soon.
She said he had never done drugs before.
During Murphy's arrest at the nightclub, Nine Network footage showed him protesting that the drugs were not his, adding "It's not mine, I haven't taken it, what are you doing, it's not mine. It's not mine."
"I don't do this s***, I only drink," he added.
Murphy's parents have arrived in Bali to offer their support although they are yet to arrive at Kuta police station where their son is being held.
Sky Garden issued a statement on Wednesday saying it wanted to assure Australian parents that the safety of their children was their main priority.
"We are saddened by the incident last night and we want to assure all parents at home in Australia that the safety of their children is our main priority," it said.
Issuing a timeline of events they allege happened, they said a "young man" tried to get inside their nightclub at around 12.45am on Tuesday and that security found white powder inside a 5cm by 5cm plastic sachet in his bum bag.
The nightclub said the young man was taken to the nearest police post and that their security guards were asked to re-enact the events which happened.
"At this time, people from the media were already (there) ... and they recorded the re-enactment."
