Customs official Made Wijaya said Monday Lindsay Sandiford, 55, had more than 10 pounds of cocaine in the lining of her suitcase after arriving May 19 on the Indonesian island on a flight from Bangkok, the BBC reported.
Three Britons and Indian national were believed to be the intended recipients, officials said.
The Jakarta Post reported Bali police said the Britons included a husband and wife who own a villa in Bali. The couple, identified only by initials, were arrested after picking up cocaine from Sandiford, Bali police said.
Officials did not say what part of Britain Sandiford is from.
She told authorities she is a housewife.
"We are aware of the arrest in Bali, and we stand ready to provide consular assistance," a British Foreign Office spokesman said of Sandiford's arrest
The BBC said it contacted the British Embassy in Jakarta but officials had yet to comment.
The British broadcaster noted Indonesia has some of the toughest anti-drug laws in the world. Drug traffickers have been sentenced to the death penalty in the past but it has been used infrequently in recent years.