Aust and Indon envoys to heal rift

Indonesia says Australia will have to agree to a code of conduct before relations can normalise. Source: AAP

FOREIGN Minister Julie Bishop could be given the delicate job of helping mend the diplomatic rift with Indonesia over allegations of Australian spying activities.

While her appointment as special envoy hasn't been confirmed, it's understood Ms Bishop is a strong candidate given the likely Indonesian counterpart will be Foreign Minister Marty Natalegawa.

Prime Minister Tony Abbott on Wednesday agreed with Indonesian President Susilo Bambang Yudhoyono's proposal that trusted envoys meet to start the process to rebuild ties between the two nations.

The president wants a new code of ethics between Australia and Indonesia that would include guarantees about spying activities.

He insists an agreement must be signed by him and Mr Abbott before the relationship can be fully normalised.

While he will take time to fully respond to Dr Yudhoyono's statement over the next few days, Mr Abbott embraced the idea of an envoy meeting.

"I think that's a good way forward," he told reporters in Melbourne.

The prime minister is keen for a quick resolution built "on a strong and lasting basis".

"That's why I want to reflect for a short period of time ... then the trusted envoys need to sit down and work through some of these issues," Mr Abbott said.

The prime minister has proposed the establishment of a security round table, so both nations could build greater mutual trust.

"Obviously, that relationship does depend on a great deal of intelligence sharing," he said.

"I want to deepen and extend that in the weeks and months ahead."

Dr Yudhoyono suspended military, security and people-smuggling co-operation last week after revelations Australian spies targeted his mobile phone, and those of his inner circle.

He remains disappointed a letter to him from Mr Abbott did not apologise for the 2009 phone-tapping activities.

But he did welcome Mr Abbott's commitment that "Australia would not do anything in the future" to harm or damage relations with Indonesia.

The task facing Australia's envoy is unlikely to be easy.

Indonesian Industrial Minister Mohamad Suleman Hidayat was quoted in the Koran Tempo newspaper on Wednesday as saying Dr Yudhoyono was angry.

"The president is not embarrassed, he's angry. Tell Australia, I'm angry," Mr Hidayat reportedly said.

Mr Abbott wouldn't comment on the contents of his letter to the president.

Meanwhile, Trade Minister Andrew Robb appeared to break protocol and stray from the government script by confirming the phone tapping did take place.

"It's unfortunate that this taping that took place several years ago has been made public," he told ABC television.

"But it's there. It's a fact of life. We've got to deal with it."

Later, Mr Robb backed away from his remarks, saying he wasn't privy to specific details of intelligence matters.

Opposition Leader Bill Shorten was sticking to his promise not to make political hay out of the Indonesian rift until he received a briefing on the negotiations from the government.

"We're pleased Indonesia is providing some initial signs of working with Australia," he told reporters, adding Labor wanted the relationship back on track.

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