The singer has appeared in court.
Former Australian Idol star Kate DeAraugo is reportedly facing up to 15 years in prison on drugs and weapons charges.
According to New Idea, the 31-year-old, who won the TV singing competition in 2005, was allegedly found in possession of ice twice in five days.
Police allegedly first caught DeAraugo with 430 milligrams of ice in Shepparton on 10 June, and then again on 15 June with a "trafficable quantity of the drug", as well as a large knife and tomahawk without lawful excuse.
Music manager, Tony Southwell, who hired DeAraugo has a backing singer for a James Southwell Band tour in January and February of this year, was shocked by the news.
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"It's very, very sad because she's a beautiful young woman with an incredible gift," Southwell said.
"She's had a really tough time, but I thought she was over all that stuff. This is awful."
DeAraugo will appear in court on 4 October, facing a maximum penalty of 15 years in jail.
After winning Australian Idol, DeAraugo enjoyed quick success with her single, Maybe Tonight, which peaked at #1 in Australia, while her debut album, A Place I've Never Been, peaked at #10.
The next year the Melbourne-born singer teamed up with fellow Australian Idol contestants, Ricki-Lee Coulter, Paulini and Emily Williams, to form Young Divas and tour the country.
Together, the group released two studio albums, Young Divas (2006) and New Attitude (2007).
Their 2006 cover of Donna Summer's This Time I Know It's For Real peaked at #2 on the ARIA Singles chart and was certified platinum.
The news comes only weeks after DeAraugo's former bandmate, Paulini, pleaded guilty to bribing a government official in court.