Indonesian President Susilo Bambang Yudhoyono says he is suspending cooperation with Australia on people smuggling in the wake of recent spying revelations.
The president also said on Wednesday that he would continue to demand an official explanation from Australia about revelations that Australian spies targeted his mobile phone in 2009.
"I am still waiting," Dr Yudhoyono said on Wednesday.
The president said he would send a letter of demand to the Australian government, requesting an official apology and an explanation from Prime Minister Tony Abbott.
Indonesia will also suspend all military cooperation with Australia, the president said.
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Australia Defence Minister David Johnston's office said there was no official confirmation yet that Indonesia had halted defence cooperation activities.
"But it is certainly on the record that it has stopped," a spokesman said.
"We are just waiting on the details of how this is going to play out."
At a press conference at his presidential palace in Jakarta, Dr Yudhoyono likened the spying claims to cold war tactics.
It's difficult for me to understand why the (wire-tapping) was conducted," Dr Yudhoyono said.
"Now is not the era of the cold war."
Dr Yudhoyono said "coordinated military cooperation" including naval patrols would cease immediately.
"I have asked for that to be halted until everything is clear," he said.
Suspending cooperation on people smuggling will deal a big blow to Mr Abbott's asylum seeker policies.
"You are well aware that we are facing a joint problem of people smuggling that has been a problem for both Australia and Indonesia," Dr Yudhoyono said.
"Indonesia and Australia is not in the position of confronting each other or in enmity."
The president said he could not understand why Australia had chosen to spy on a "friend and not the enemy", adding that he viewed the conduct of the Australian government as an illegal action.
Dr Yudhoyono said he wanted a personal explanation, insisting comments directed at "Australia's domestic community" would not suffice.
"If Australia wants to maintain a good relationship with Indonesia in the future, there must be an official explanation," he said.
Dr Yudhoyono said cooperation in the area of intelligence gathering and the sharing of information would also be halted.
"I have also asked to stop for a while joint training between Indonesian soldiers and Australians, whether army, navy or air force," he said.
Dr Yudhoyono said he wanted to make it clear that cooperation on combating people smuggling would not go ahead until he received an explanation from Mr Abbott.
"It's impossible for us to continue when we're not sure that there's no tapping of Indonesian soldiers who are performing a duty for both countries," he said.
Dr Yudhoyono said that for cooperation to resume, Indonesia would in the future need "some kind of protocol, code of conduct as well as guiding principles".
"I'm still hoping and I believe that Australia is also hoping, especially the hope of people from both countries, Indonesian people and Australian people, that we still can have a good relationship and cooperation after we overcome this problem."
"Australia, I know they respect Indonesia's sovereignty," he said.
"I hope we can finish this, we solve this and then we review, we make new sets of rules, new agreements and then we can take steps ahead to continue the good cooperation and relationship between the two countries."
Dr Yudhoyono said that for cooperation to resume, Indonesia would in the future need "some kind of protocol, code of conduct as well as guiding principles".
"I'm still hoping and I believe that Australia is also hoping, especially the hope of people from both countries, Indonesian people and Australian people, that we still can have a good relationship and cooperation after we overcome this problem."
"Australia, I know they respect Indonesia's sovereignty," he said.
"I hope we can finish this, we solve this and then we review, we make new sets of rules, new agreements and then we can take steps ahead to continue the good cooperation and relationship between the two countries."
