Before the news of her positive test broke, Swedish Athletics made it clear that they were happy for her to compete in the forthcoming IAAF World Indoor Championships in Portland, Oregon, due to take place between March 17 and 20.
Aregawi switched allegiances to Sweden soon after the Olympics, gaining citizenship through her marriage to a naturalized Swede of Ethiopian origin.
"We are totally opposed to all forms of cheating, doping and illegal means. We have a zero tolerance, and this is totally unacceptable", he said.
Citing documentary evidence from the tax authorities, the paper said that Aregawi had confessed that she had never been resident in Sweden, and that she submitted false information to the Immigration Service when she applied for Swedish citizenship.
World indoor 1500 meters champion Abeba Aregawi has been banned from Swedish athletics after she tested positive for an unspecified banned substance, the national federation said on Monday.
Aregawi won the world title in Moscow in 2013 in a race in which Great Britain's Hannah England finished fourth but there is no suggestion Aregawi's performance in that race is under scrutiny.
She failed the out-of-competition urine test conducted by the IAAF, Xinhua quoted the world track and field governing body as saying.
"Following notification of the laboratory finding, the athlete has voluntarily withdrawn from competition until the investigations into the laboratory finding are completed", a statement reads.
In Beijing's World Championships a year ago, she finished sixth in the final.
"We have withdrawn the activity support we gave her with immediate effect and the situation regarding her place on the Olympic team is in quarantine as we wait for the result of the B test", SOC chief executive Peter Reinebo told Reuters.