An Indonesian resort island known as a romantic wedding venue will host an ice-breaking meeting between Tony Abbott and Susilo Bambang Yudhoyono.
Ties between Australia and Indonesia have been uneasy since the Abbott government began turning back asylum-seeker boats and reports emerged of spies tapping the president's phone.
Relations soured to a point that Indonesia's ambassador to Australia, Najib Riphat Kesoema, was recalled to Jakarta in November.
But since then the ambassador has been a key figure in rebuilding relations and working towards a code of conduct, which could be signed or at least progressed when the leaders meet on Batam Island on Wednesday.
The ambassador met with Foreign Minister Julie Bishop in Canberra last week and this was considered constructive by government sources.
A phone call between Mr Abbott and the president in May is also understood to have helped mend bridges, with the prime minister apologising for not attending a planned meeting in Bali.
Indonesian officials say the president is keen to leave office later this year with a legacy of strong relations with Australia intact.
The pair will discuss not only the bilateral relationships but developments in the region such as China's growing interest in disputed territories.
Batam Island, a popular location for beach weddings, was also the venue for a reconciliation meeting between former prime minister John Howard and Mr Yudhoyono in 2006.
The Howard meeting came after the Papuan boat people crisis and the release of radical Islamic cleric Abu Bakar Bashir.
Mr Abbott is making the eight-hour stopover on his way to France for the 70th anniversary of the D-Day landings at Normandy and a trade and investment tour of North America.
He will meet with US President Barack Obama in Washington DC and hold talks with Canadian Prime Minister Stephen Harper in Ottawa.
