The apology, published at the bottom right corner of its page six weekend edition today, conceded that Xenophon had not made comments derogatory to Islam.
"Utusan Malaysia confirms that there were mistakes in the publication of statements in the article," the apology read.
"We accept that in his speech to the Australian Parliament that was cited in the (Utusan) article, Senator Xenophon (right) had not used the word ‘Islam' and he did not say that 'Islam is not a religious organisation, but a criminal organisation that hides behind its so-called religious beliefs'."
The said news report, 'Senator anti-Islam pantau Bersih 3.0' (Anti-Islam senator observes Bersih 3.0), was published on May 1 in Utusan and uploaded on its website.
The quoted comments were indeed made in Xenophon's speech on Nov 17, 2009 but he was referring to Scientology and made no mention of Islam.
"Based on the above reasons, Utusan Malaysia hereby withdraws all the statements in the article and sincerely apologises to Senator Xenophon for any distress or embarrassment caused from the publication of the article," said the daily.
The apology under the title 'Statement of apology and retraction' comes eight days after New Straits Times (NST) issued an apology for an identical mistake made in an article published on May 2.
NST, being an English daily, had received the brunt of Xenophon's criticism while Utusan escaped scrutiny despite first carrying the erroneous report.
However, Xenophon on Monday had told Malaysiakini that he was considering legal action against all newspapers "in whatever languages" which had carried the story, including Utusan.
Xenophon was part of a seven-member international team on a fact-finding mission on Malaysia's electoral system. The team was commissioned by parliamentary opposition leader Anwar Ibrahim.
The independent senator had slammed the police crackdown on protesters at the April 28 Bersih 3.0 rally, where he was an observer.