Indonesian president Susilo Bambang Yudhoyono says he is suspending co-operation with Australia over people smuggling in the wake of recent spying claims.
The president also said he would continue to seek an explanation regarding claims Australian spies targeted his mobile phone in 2009.
“I am still waiting,” Dr Yudhoyono said on Wednesday.
The president also said he would send a letter to the Australian government seeking an apology and an explanation from the prime minister Tony Abbott.
Indonesia will also suspend military cooperation with Australia, the president said.
Australia defence minister David Johnston’s office said there was no official confirmation cooperation had ceased.
“But it is certainly on the record that it has stopped,” a spokesman said.
“We are just waiting to see how all this plays out.”
At a press conference at the presidential palace, Dr Yudhoyono likened the spying claims to “cold war tactics”.
“It is difficult for me to understand why (the wire tapping) was conducted,” he said.
“Now is not the era of the cold war.”
Dr Yudhoyono said “coordinated military cooperation” including naval patrols would cease immediately.
“I have asked for that to be halted until everything is clear,” he said.
Suspending cooperation will be a big blow to Mr Abbott’s asylum seeker policies.
“You are well aware that we are facing a joint problem of people smuggling that has been a problem for both Australia and Indonesia,” Dr Yudhoyono said.
“Indonesia and Australia is not in the position of confronting each other or in enmity.”
Meanwhile Indonesia military spokesman Rear Admiral Iskander Sitompul confirmed joint sea patrols were at risk as anger increases in Jakarta over the spying drama.
“The joint patrol is aimed at catching migrants and handling other territorial issues,” Rear Admiral Iskandar said.
The Indonesian Defence Ministry’s director for international cooperation, Brigadier-General Jan Pieter, said he was still waiting instructions from President SBY on whether to cut ties with Australia.
Indonesian Law and Human Rights Ministry spokesman Marolan J Barimbang also said preparations are under way to “lower the level of cooperation” with Australia in relation to anti-people smuggling operations.
“Once there are instructions, we are ready to lower the level of co-operation,” Mr Marolan told the Jakarta Post newspaper.
“We are anticipating such an instruction.”
Indonesian ambassador to Australia, Nadjib Kesoema, was recalled from Canberra earlier this week in the wake of the spying allegations.
Mr Abbott said today he would not overreact to claims about Australia’s involvement in spying on the Indonesian president.
He again reiterated his regret over the embarrassment caused to the president Susilo Bambang Yudhoyono by reporting of the claims.
“I deeply and sincerely regret the embarrassment that media reports have caused President Yudhoyono, who is a very good friend of Australia,” he told parliament during question time on Wednesday.
“I do understand how personally hurtful these allegations have been, these reports have been, for him and his family.”
Indonesian trade minister Gita Wirjawan has said his country is prepared to look elsewhere for other trading partners.
“It is a serious issue. We need, therefore, to make our position clear so that the Australian government acts quickly,” Mr Gita said.
He appeared to single out agriculture and the cattle trade as areas that could be at risk.
“If these relations are disrupted, we will need to seek other countries as trading partners,” he said.
“Moreover, we have a deficit in our trade balance with Australia so far.”
Federal independent Bob Katter such a move would be a huge blow.