Nusa Dua – Indonesia has agreed to allow Australia to reopen a consulate in East Timor as part of a push to settle the future of the troubled territory, Australian Foreign Minister Alexander Downer said Wednesday.

Downer, who is taking part in talks with senior Indonesian Cabinet ministers on the Indonesian resort island of Bali, said Australia would provide "generous assistance" to East Timor whether it stays part of Indonesia or becomes independent.

He said Australia, which neighbors East Timor, would also be willing to help it cope during any transitional period.

Australia is also asking the United States, Japan and the European Union to set up an international diplomatic contact group on East Timor to work through relevant issues and perhaps coordinate aid.

Australia closed its consulate in East Timor's capital, Dili, in 1971 when the half-island territory was still a Portuguese colony. Indonesia invaded four years later and declared East Timor its 27th province in 1976.

"The Indonesian government is prepared in principle to allow us to proceed with the opening of our consulate," Downer said after he met Indonesian Foreign Minister Ali Alatas. Downer was unsure when the consulate would be operational but said the timing "would be in the not too distant future."

Indonesia has offered to grant East Timor independence if its people reject an autonomy offer now being negotiated with Portugal through U.N.-sponsored talks.

Recently, Australian Prime Minister John Howard raised concerns about a possible aid burden for his country should East Timor's people press for independence after more than two decades of guerrilla warfare and human rights abuses by the Indonesian military.

Despite this, Downer said Australia wouldn't limit its aid contribution. "We're prepared to provide generous assistance to East Timor whichever direction it goes," Downer said in reference to the alternatives of autonomy or independence.

Downer is scheduled to visit Indonesia's capital, Jakarta, on Thursday, where he is to meet President B.J. Habibie as well as jailed East Timorese resistance leader Jose Alexandre Xanana Gusmao, who was recently transferred from prison to house arrest.