Leeza Tracey Ormsby, aged 37, was detained last week at the property in the tourist area of Kuta after police received a tipoff about a party involving drugs in the neighbourhood.
Police found a cigarette containing a small amount of hash in her bag, 27g of hash, and ecstasy pills weighing 132g in a cupboard.
Agus Tri Waluyo, head of the anti-narcotics branch of the Bali police, said police were still deciding whether to charge her with sale of illegal drugs or possession for personal use.
If she is charged with sale of drugs, she could face the death penalty under Indonesia's tough anti-narcotics laws.
A charge of drug use would not carry a maximum penalty of death but she is still likely to receive a jail term.
Her lawyer Ari Soenardi said Ormsby was "a bit stressed" following her arrest.
Foreigners regularly get caught with illegal drugs in Indonesia, particularly on the hard-partying holiday island of Bali, and some are on death row.
British grandmother Lindsay Sandiford was sentenced to death last year after being found with $2.4m worth of cocaine in her luggage as she arrived in Bali.
The case of drug trafficker Schapelle Corby, who spent more than nine years behind bars for smuggling marijuana into Bali, received huge attention in her native Australia.
The 36-year-old was released on bail on 10 February.