An Indonesian man has been arrested over the death of a Perth father at a bar in Bali. 

Troy Johnston, 40, was holidaying on the island with his wife and child when he was allegedly assaulted while drinking at Uncle Benz Cafe at Balangan, Jimbaran, early on Thursday morning.

Police have arrested the bar owner I Gede Wijaya, 39, who appeared at a press conference flanked by armed police officers.   

"I really regret that, I had no intention at all as I know him well," he said. 

Mr Wijaya said he first met Mr Johnston when he came into the venue two days prior. 

Indonesian police allege the men were drinking together when an altercation took place and Mr Wijaya hit Mr Johnston over the head with a wooden stool, causing him to collapse. 

They told the press conference that Mr Wijaya will be charged with murder, which carries a possible 15-year jail term.

Mr Johnston worked for mining company Rio Tinto in Perth.

"We are devastated by the news that one of our much loved and valued team members has tragically passed away overseas," the company said in a statement.

"Our thoughts and deepest sympathies are with Troy's family and friends, and we are providing them all the support we can during this very difficult time.

"Troy's colleagues are deeply saddened and we are providing them access to a range of support services."

The Department of Foreign Affairs and Trade has confirmed it is providing consular assistance to the family of an Australian who died in Bali.