Richards was arrested by appointment at a police station on Wednesday has been bailed until April.
He is the second Manchester City player to be arrested in recent days. Last week the Brazilian star Robinho was arrested over allegations an 18-year-old woman was raped in a nightclub in Leeds.
Yesterday Mark Hughes, the Manchester City manager, said the club would do everything to support Richards, and said he could be involved in Saturday's home game against Middlesbrough.
He said: "We are very supportive of Micah. He went to the police station in a pre-arranged appointment. It is an ongoing situation, we are aware of that and we are supportive of him."
Asked whether the defender was in the right frame of mind to be considered for selection this weekend, he replied: "Absolutely."
Richards, who joined Manchester City from Oldham Athletic as a 14-year-old, is considered one of English football's brightest young players, and became England's youngest capped defender when he made his full international debut in November 2006.
He has won 11 caps but has not featured under current England manager Fabio Capello and has struggled for form at club level this season. He signed a new five year deal with City last February.
A spokesman for Greater Manchester Police said: "A 20-year-old man has been arrested after an assault outside a Hale nightclub, at about 12.30am on December 24 2008.
"He has been bailed until April 8 pending further inquiries."
A Manchester City spokesman said Richard was co-operating fully with the police and "vigorously denies any involvement" in the alleged incident.