Indonesia has recalled its ambassador to Canberra amid a furore over the Immigration department's decision to grant the temporary protection visas.
Australian Foreign Minister, Alexander Downer, said he is confident the visa decision will not cause long-term damage to relations with Indonesia.
However Doctor Hugh White, from the Australian National University, has told ABC radio he is not as confident.
“If in particular, public opinion in Australia in support of West Papua does pick up strongly, and if the government does find itself under pressure to start adopting a more accommodating approach to West Papuan independence sentiment than I think it will do a lot of damage to our relationship” he said.
Indonesian foreign ministry spokesman Yuri Thamrin said that its envoy was being called back to Jakarta for "consultations" with foreign ministry officials over the matter.
Echoing a statement cleared by the presidential palace, Mr Thamrin said Jakarta was "surprised, disappointed and we deeply deplore this decision".
Mr Thamrin told a press briefing "It is not a permanent recall, but it is important because there are issues that need to be discussed over this incident."
Australia's envoy to Jakarta, Bill Farmer, was summoned to the foreign affairs ministry late last week and told of Indonesia's disappointment and dismay.
Australia has sought to hose down the row, which threatens to become the worst diplomatic crisis between the two neighbours since the 1999 East Timor independence referendum.
Canberra said it remains opposed to independence for the Papua province, and Mr Downer said the decision to grant visas was taken at "arm's length" from the government.
"I hope they understand where we're coming from -- we're certainly not in any way changing our position on the recognition of West Papua as part of the Republic of Indonesia," he told ABC radio.
However Indonesian Foreign Minister, Hassan Wirajuda, said Australia should take action against separatist sympathisers in Australia.
Jakarta complained the decision was based on "one-sided" information from the Papuans only, and Indonesia had not been consulted.
The province of Papua, also known as West Papua or Irian Jaya, is the western half of the island that is also home to Papua New Guinea, and is a former Dutch colony taken over by Indonesia in the 1960s.
Human rights groups claim that tens of thousands of people have been killed in the mineral-rich region since separatist violence began in the 1970s.