Foreign Minister Julie Bishop and her Indonesian counterpart Marty Natalegawa on Thursday agreed to set up a "hotline" to avoid future misunderstandings and hold further talks on a proposed six-point plan to rebuild trust between the two countries.
Ms Bishop told reporters in Jakarta the Australian government regretted the hurt caused to President Susilo Bambang Yudhoyono by media reports of alleged tapping of his mobile phone by Australian
intelligence officials four years ago.
The minister also promised to "not undertake any act or use our assets and resources, including intelligence assets, in any way to harm Indonesia".
Speaking on Fairfax Radio on Friday, Mr Abbott was asked whether Australia had agreed to stop collecting intelligence on Indonesia altogether.
"No. And they certainly haven't agreed to stop collecting intelligence on Australia," he said.
"But we are close friends, we are strategic partners and I certainly want Australia to be a trusted partner of Indonesia and I hope Indonesia can be a trusted partner of Australia.
"Mr Abbott expects Indonesia to co-operate in Australia's anti-people smuggling campaign because it was a "sovereignty issue".
The hotline would enable both countries to deal with issues "before they become a public drama".
"We are certainly very happy to have a more extensive, more formalised intelligence and security relationship because we think that is in the best interest of both countries."
Dr Yudhoyono wants Mr Abbott to sign a "code of ethics and protocols" before military and police co-operation is restored.
