The foreign affairs department has officially killed off a plan to establish a diplomatic mission in Bougainville in Papua New Guinea.
The autonomous region of PNG is due to have a referendum in coming years to decide on independence and it's a sensitive issue for the PNG government.
PNG signed a peace agreement with Bougainville in 2001 after years of civil war.
Last year's budget revealed a new diplomatic post for the island, but the announcement caused a major diplomatic storm resulting in PNG briefly banning Australians from travelling there.
Department secretary Peter Varghese acknowledged Australian officials hadn't sought permission from the PNG government at the highest level before making the announcement.
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He said there is a large Australian aid program on Bougainville and that was why the department had sought a permanent base there.
"It was not handled in the end to anyone's satisfaction," Mr Varghese told a Senate estimates hearing on Friday.
Australia's high commissioner to PNG Deborah Stokes made an early exit from her posting, in the months after the diplomatic row erupted.
Mr Varghese said the department had learned a lesson from the experience and properly consulted the PNG government before announcing a new mission for Lae, in this year's budget.
