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.