Prosecutors on Monday submitted to court a request to withdraw the case to extradite al-Araibi to Bahrain, where he faces a 10-year prison sentence for an arson attack that damaged a police station.
The director-general of worldwide affairs for the Thai Government confirmed to the ABC that the Attorney-General requested the case for Mr al-Araibi's extradition to Bahrain be dropped.
Al-Araibi has been in a Bangkok jail since November, after being arrested while on honeymoon due to an Interpol notice issued at Bahrain's request.
Mr Araibi's supporters said he should be freed and is protected under his status as a refugee with Australian residency.
The player fled Bahrain in 2014 and now plays for semi-professional Melbourne-based club Pascoe Vale.
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In contrast, his assessment of the 18-year US-led military campaign in Afghanistan was far less positive. He also served as the US Ambassadors to Afghanistan and Iraq during the Bush Administration.
Bahrain has denied allegations of torture and said Mr Araibi is a fugitive who should be returned. Bahrain has a Shiite majority but is ruled by a Sunni monarchy.
The 25-year-old was detained in Bangkok more than two months ago for alleged vandalism offences in his native Bahrain.
On Monday evening, Foster tweeted his thanks to Thai Prime Minister Prayut Chan-o-cha and his Government.
The Bangkok court previously set an April 22 date for the next hearing.
Foreign minister Marise Payne said there were still "a number of steps to go in this process" but said al-Araibi would hopefully be back in Australia in the next day or so. The Australian government, Fifa and other football bodies have supported his case. She said "a great deal" of work had gone on behind the scenes.