Popovic also insists securing a loan move and playing minutes isn't enough to guarantee boom youngster Nestory Irankunda a spot.
Enigmatic winger Arzani, 26, attended the 2018 World Cup as a teenager and was widely considered Australia's next big thing, but has never fulfilled his potential.
Popovic coached Arzani at Melbourne Victory last season and he had a career-best effort, scoring four goals and notching six assists.
He was called up for October's qualifiers against China and Japan but didn't see the pitch and this season has shown moments of brilliance, delivering just one goal and three assists.
Popovic is demanding an end product.
"I know Daniel well, and he's got potential. And we talk about him with potential - I think we've been talking about that since he was 18. What's he now, 25, 26?" Popovic said.
Coach Tony Popovic has laid down the law especially for young Socceroos aspirants. (James Ross/AAP PHOTOS)
"And when he doesn't play, everyone questions why he doesn't play, but he needs to raise his level.
"We need goals, we need assists, that's what Daniel needs to do.
"Doing one good dribble or one good trick or setting up one goal should not be enough to play for Socceroos. Needs to be more.
"I had him in camp in October. He knows what I think of him, so I've been telling you something now that he knows. He wasn't good enough. He wasn't good enough in October. His level was really poor in training.
"Now, maybe for him, it's okay, but it's not enough. So every player needs to raise their level, and if they raise their level, that's how we want to be."
Australia (seven points) sit second in group B, nine points behind runaway leaders Japan and one point clear of Indonesia, Saudi Arabia, Bahrain and China.
The top two teams qualify directly for 2026, with third and fourth entering another round of qualifiers.
"We want to be competing with Japan. That's our goal. And we want to be competing with the best. The last two World Cups, we went through the playoff system, but we keep expecting to make top two," Popovic said.
"That's good. That's good. But if we expect to come in the top two, then we must raise the level. We must raise the bar.
"Your expectation, my expectation, should be higher, because history shows we don't do that often. We don't go automatically to World Cups, but that's something that we should aspire to. We shouldn't shy away from that.
"But if we want that, just playing a game because someone's got some minutes at Grasshopper, for example, that can't be enough.
"They need to be at elite level of Grasshoppers. Then they are elite for Socceroos, and then they can help us get in the top two.
"That's pretty much it I think in terms of all players."
Irankunda, who was left out of Popovic's November squad, recently secured a loan move to Swiss club Grasshopper from Bayern Munich.
Popovic wants to see more from young talent Nestory Irankunda (r). (Richard Wainwright/AAP PHOTOS)
"He has the potential to be a key player for the Socceroos for many years, he has that potential," Popovic said.
"But just playing minutes is not enough.
"And I don't think just because he went to Bayern Munich that we put him in a separate bracket, that if Nestory plays minutes, then he gets selected for the Socceroos.
"He's 18. I envisage if he fulfils his potential, he should be a Socceroo for many years, but he needs to be more than just playing some minutes."
The Socceroos host Indonesia in Sydney on March 20 and play China away five days later.
Australia then play Japan in Perth on June 5 before travelling to face Saudi Arabia on the 10th in a pivotal final window.
