An emotional Craig Foster, who had tirelessly campaigned for Mr Al-Araibi's cause, said "I'm very proud of Australia".
"The decision to issue an worldwide arrest warrant stems from Mr.al-Araibi's decision to flee while awaiting trial", the state news agency wrote.
Bahrain authorities did not immediately respond to a request seeking comment.
Officials in Bahrain, an island kingdom off the coast of Saudi Arabia that's home to the U.S. Navy's 5th Fleet, said the country "reaffirms its right to pursue all necessary legal actions against" al-Araibi.
But the soccer player disputed the charges, telling The New York Times that his innocence was easily documented because he appeared in a live televised match at the time of the incident.
Australian Prime Minister Scott Morrison had also repeatedly pushed for his release, saying that he had written letters to his Thai counterpart Prayut Chan-O-Cha and stressed "how strongly" Australians feel about Araibi's case.
A criminal court in Thailand had ordered his release after prosecutors submitted a court request to withdraw al-Araibi's extradition case to his native Bahrain, where he faces a 10-year prison sentence. He was detained at the request of Bahrain relayed through Interpol upon his arrival in Bangkok in November while on honeymoon with his wife.
Bahrain wanted its former national team player to return and serve a 10-year prison sentence that was handed down in absentia after he was accused of vandalising a police station.
Hakeem al-Araibi has landed home in Melbourne, marking the end of a two month ordeal in a Thai prison.
Rights group Amnesty International, which lobbied for his release, later said Araibi had arrived at the airport.
He has said he was blindfolded and had his legs beaten while he was held in Bahrain previously.
The player fled Bahrain in 2014 and now plays for semi-professional Melbourne-based club Pascoe Vale.
"He is a free man", Chatchom Akapin, an official in the Thai Attorney-General's office, said on Monday after Bahrain withdrew its extradition request without explanation.
Support for the young footballer's release was galvanised by former Socceroo Craig Foster with FIFA, the International Olympic Committee, and high-profile players calling for Thailand to free him.
Pressure had been intensifying on both the Bahraini and Thai governments to drop the extradition case, especially after videos of Araibi walking in shackles were circulated on social media.
An Interpol red notice had been issued for Araibi's detention by Bahrain, but the notice should never have been issued as refugees can not be returned to the country from which they have fled.
In a statement provided to Guardian Australia, they said they were "heartened" to see pictures of his release, but urged the world not to turn away from those still unjustly detained in Bahrain.
"We greatly respect the process that they have had to work through and we greatly appreciate their listening to the issues that have been raised by our government and many others who have raised this case".