Socceroos coach Graham Arnold says young gun Daniel Arzani "hasn't kicked a ball since October" and didn't feel ready to return to playing in the Olyroos' AFC U-23 Championship campaign next month.

Arzani was not named in Arnold's 23-man squad for the tournament in Thailand, which doubles as Olympic qualifying, as he continues his recovery from a knee reconstruction.

"We've obviously had the communication with him for a long time," Arnold said.

"Daniel hasn't kicked a ball since October. His rehab's come along quite slowly.

"I spoke to Daniel just a week ago and that's why I needed that extra week to try and bide time to announce this squad.

"And Daniel just feels that his body's not ready for this tournament, he feels that to back up every three or four days to play a game in a tournament situation, he's not ready.

"So unfortunately he's not in the squad."

Arzani was a revelation off the back of a tantalising run of form at the tail end of Melbourne City's 2017/18 season.

He was selected in Bert van Marwijk's 2018 World Cup squad, scored in a pre-tournament friendly against Hungary then featured in all three group stage matches as a substitute.

Arzani signed with Manchester City and was sent to Celtic on a two-year loan deal but tore his anterior cruciate ligament on debut in October 2018 and has yet to feature under new manager Neil Lennon since his injury.

It has been a tough period for Australians at the Scottish Premiership leaders.

Tom Rogic has made just eight appearances - and four starts - and was left on the bench during Celtic's 2-1 Old Firm derby loss to Glasgow rivals Rangers.