A new type of three degrees of freedom axial-radial hybrid magnetic bearing (3-DOF ARHMB) with compact structure, shorter axial length and smaller volume is proposed for the flywheel energy storage system. The axial direction adopts the permanent magnet biased thrust bearing (PMB) made of soft magnetic composite materials (SMCs). In the radial direction, the laminated structure is used to reduce the eddy current, and the Halbach array is introduced to strengthen the magnetic density of the radial air gap. Firstly, the dynamic magnetic flux distribution of the 3-DOF ARHMB is analyzed by the finite element method (FEM). Based on the equivalent magnetic circuit method, the equivalent reluctance model with comprehensive consideration of eddy current effect and magnetic leakage effect is established, and then the frequency responses are analyzed. Secondly, a constraint model coupled with structural parameters, equivalent reluctance and magnetic leakage coefficient is established, and an adaptive particle swarm optimization algorithm (APSO) is used to optimize the bearing parameters. Finally, based on the equivalent reluctance model, the axial and radial force-current factor and force-displacement factor are derived, and the dynamic characteristics of bearings with different structures and materials are compared and analyzed. The results show that the new 3-DOF ARHMB made of SMCs can provide much larger and more stable magnetic force and larger bandwidth than that made of carbon steel materials, and has better dynamic characteristics under higher-frequency conditions, which can meet the industrial requirements of flywheel energy storage system.