Foreign Minister Julie Bishop agrees "self-evidently" a potential move by Indonesia to look elsewhere for beef imports would be very damaging for Australia.
Indonesian Trade Minister Gita Wirjawan indicated on Tuesday the government would accelerate efforts to source cattle from countries other than Australia, its traditional source, in another blow to the diplomatic relationship.
It is the latest development in the fallout following revelations the Australian government tapped the phones of Indonesian President Susilo Bambang Yudhoyono and his wife in 2009.
Asked about Indonesia's move to consider sourcing beef elsewhere, Ms Bishop said the government would continue to work on the relationship, which she admitted was under pressure.
"We will continue to work on the relationship and, as I have said from the outset, this is a very important relationship for both Indonesia and Australia," she said in Sydney on Tuesday.
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"The relationship is under pressure because of these allegations. It's the same with the United States.
"Countries are under pressure as a result of these extraordinary damaging leaks by Mr (Edward) Snowden, so that is not unexpected.
"The fact is we will work very hard to ensure that we can build the relationship with Indonesia.
"The Abbott government is determined to work very hard to ensure that the relationship can continue and that is what we are doing."
Pressed on whether Indonesia halting live exports from Australia would have a damaging impact on farmers, Ms Bishop replied: "Self-evidently."
She said she was aware Mr Yudhoyono had received a letter from Prime Minister Tony Abbott responding to the spying allegations.
The government was waiting for a response, she said.
