Arnold will take over as Australian coach from Dutchman Bert van Marwijk after the World Cup in Russia in June.

Arnold has been give a four-year contract until the end of the 2022 World Cup.

He had long been a favourite for the national role on the back of his record-breaking success with the title-winning Sky Blues.

The 54-year-old will leave Sydney FC at the end of the A-League season in May.

Arnold refused a pay rise and fresh long-term offer from the Sky Blues in favour of the Australian job in what he said was an "extremely difficut" decision.

"My commitment to Sydney FC is 110 per cent to the end of this season," he told reporters in Sydney.

"It (the Socceroos job) is obviously a tough job but one I'm really excited and look forward to."

Sydney FC chairman Scott Barlow said losing Arnold was a blow to his club.

"To be blunt, we didn't want Graham to leave and we offered him a substantially bigger and longer contract to stay," Barlow said in a statement on Thursday.

"But the lure of coaching his country has ultimately proven too much, and having complied with the terms of his contract, we would not stand in his way."

Arnold's initial major Socceroos' task is an Asian Cup defence next January in the United Arab Emirates.

Arnold first played for the Australia in 1985 and is a former Socceroos assistant coach and head coach in 2006-07.

"It feels like I have never left," Arnold said.

"I have been heavily involved in the Socceroos for a long time.

"I know what the the job is about, I know it's not an easy job, a tough job ... but I feel I'm definitely ready for the job."

Australian Associated Press