Rafael Nadal is close to rediscovering his best level both on the court and mentally now he is pain free, says the Spaniard's uncle and coach Toni.

The world number six surprised many as he made it all the way to the Australian Open final in Melbourne last month, despite being seeded ninth having spent the closing stages of 2016 out with a persistent wrist injury.

On his way to the showpiece at Melbourne Park the 14-time grand slam winner dispatched Milos Raonic and Grigor Dimitrov, but came unstuck against old adversary Roger Federer.

In a thrilling final, Federer needed five sets to secure the title, both men rolling back the years with some stunning tennis.

For Nadal it was his first grand slam final since the 2014 French Open, and his coach believes his return to full fitness was key to his revival.

"For years Rafa was stressed by physical problems in the hand, the knee and the foot," Toni Nadal told L'Equipe. 

"But since he has been able to play tennis without pain he has regained a good level.

"He has recovered his game. He had a good tournament [in Melbourne], had a good attitude and played good matches. He was near his best level, both mentally and in his tennis."

While Toni expects his nephew to challenge for further titles this season, he still believes Andy Murray and Novak Djokovic - who both suffered early exits in Australia - are favourites for the remaining grand slams.

He added: "It was a surprise, but it is nothing more than one tournament, you have to wait and see what happens. 

"We do not draw hasty conclusions. For me, in the major events of the 2017 season the favourites remain Djokovic and Murray."