Don Greenlees, Jakarta – Indonesia backed away yesterday from claims President B. J. Habibie offered to open an investigation into the killings of the Balibo Five during the initial, covert phase of the invasion of East Timor in 1975.

Quoting Dr Habibie, presidential aides said Indonesia would be "quite open" in dealing with any new allegations about the deaths of the journalists, but did not want to jeopardise relations with Australia or the peace process on East Timor.

Senior government sources, describing an investigation as "politically unwise", said earlier that an Indonesian-initiated inquiry was unlikely to be undertaken despite the fresh claims suggesting a cover-up by military commanders. "Frankly, the military is already in a bad shape and one more accusation against them at this time may make them feel there is an effort, not just nationally but internationally, to corner them," one source told The Australian yesterday. "The President should be careful about saying something that pleases a foreign government but alienates him from the military at home."

The signal that Jakarta was reluctant to conduct its own investigation came as doubts were raised over whether Dr Habibie at any stage promised an inquiry. British Minister of State for Foreign Affairs Derek Fatchett claimed he had received an assurance from Dr Habibie in Jakarta that inquires would be initiated.

But Indonesian and foreign diplomatic sources said yesterday that Mr Fatchett had only raised the issue as he was walking out the door at the end of a meeting with Dr Habibie on October 8.

Quoting Dr Habibie, presidential spokeswoman Dewi Fortuna Anwar said Dr Habibie had told Mr Fatchett Indonesia was concerned about human rights and if there was a formal request for information "the Government is quite open".

"The President also cautioned that in looking at the past we must not endanger a very good relationship between Indonesia and Australia and we must not endanger the peace process on East Timor," Ms Fortuna Anwar said. Controversy over the deaths of the five Australia-based journalists – two of whom were British citizens – has been reignited by fresh testimony from an East Timorese man that he saw Indonesian troops shoot four of the men and stab the fifth in the town of Balibo on October 16, 1975.

The witness, Olandino Guterres, claimed the then field commander and now Information Minister, Yunus Yosfiah, gave orders for the killings. Lieutenant-General Yosfiah has denied any involvement. Diplomatic sources suggested it might be difficult for John Howard to avoid raising the issue with Dr Habibie during a visit to Jakarta, tentatively scheduled prior to the start of the Asia-Pacific Economic Co-operation leaders' summit in Kuala Lumpur next month. Dr Habibie has sent two letters to the Prime Minister since his re-election stressing the need to strengthen bilateral ties.