Degenek returned to the Serbian champions in July, just six months after leaving the club on a big money deal with Saudi Arabia's Al-Hilal.

Since returning to the club where he faced European heavyweights Liverpool, Napoli and Paris St Germain in last season's Champions League, Degenek has helped the club back into the group stages of the competition this season.

The Australian scored in the first leg of Red Star's play-off with Swiss club Young Boys, which the Serbian team eventually secured on away goals.

They will face German giants Bayern Munich, last year's beaten finalists Tottenham and Greek club Olympiakos in their group.

Arnold said playing at the highest level in club football will be good for Degenek and, in turn, a boost for Australia.

"He's gone back there and it's a fantastic story," Degenek said.

"He's doing exceptionally well, he scored in the first leg to help them get through (to the Champions League) and the fact that players are playing at that level, and playing against those types of players in the Champions League is just great for the Socceroos."

Degenek was named by Arnold on Friday in his 23-man squad for next month's World Cup qualifying opener against Kuwait.

It will be the 25-year-old defender's first appearance for the Socceroos since January's Asian Cup, where Degenek's loose backpass against the United Arab Emirates in Al Ain allowed the host nation to secure a 1-0 win and end Australia's title defence.

Having given him a break for June's friendly against South Korea, Arnold said he was happy with Degenek's state of mind heading into the 2022 World Cup qualifying campaign.

"We had those conversations about where to go after he left Saudi and he chose to go back to Red Star, where he felt very comfortable in that environment which is important for a player," Arnold said.

"For Milos, the fact he's in those conditions and playing those types of games is only going to be great for us."