
Advocaat, now with Russian club Zenit St Petersburg, was expected to take up the post in January, the Herald Sun reported.
The paper said it was unclear whether Advocaat would bring assistant coach Pim Verbeek with him or whether Arnold would be retained.
The top coaching position has been vacant since fellow Dutchman Guus Hiddink, who took both Holland and South Korea to World Cup semi-finals, left to coach Russia.
Graham Arnold, assistant to Hiddink, has filled in since Hiddink shifted focus to Russia at the end of the World Cup.
Advocaat, 59, is also a former coach of the Dutch national side. And, like Hiddink, coached South Korea.
DPA