Brendan Pearson – The Prime Minister, Mr John Howard, and Indonesia's President, Mr Abdurrahman Wahid, have pledged to repair a diplomatic relationship marked by discord and bitterness since the East Timor independence vote in 1999.

After the first meeting between leaders of the two countries on Australian soil since 1975, Mr Howard and Mr Wahid yesterday agreed in Canberra to put aside political strains and pursue closer and smoother relations, including a more regular exchange of high-level visits.

Mr Wahid, who faces an impeachment hearing in August, said the main purpose of his visit was to "improve the relationship, which was deteriorating, between the two countries and the two nations, despite the fact that Indonesians as a nation and a people, like the Australians".

At a summit marked more by its symbolism than concrete initiatives, Mr Howard signalled his backing for a proposal floated by Mr Wahid for a new regional sub-grouping – the Western Pacific Forum, comprising Australia, Indonesia, New Zealand, the Philippines, Papua New Guinea and Brunei.

The grouping, which would meet initially at foreign minister level, would canvass political and regional security issues, government sources said last night.

In an exchange of diplomatic nods, Mr Howard emphasised his Government's support for Indonesia's territorial integrity, while President Wahid pledged to help the East Timorese "regain their position in the international community".

At a press conference, President Wahid fended off calls from human rights groups for Indonesian military leaders implicated in violence in East Timor to be prosecuted by an international war crimes tribunal. "They have to be brought to justice and the law enforcement will take place in Indonesia. But of course it needs time, because everything in Indonesia is slow," President Wahid said.

The Federal Government has been pressing Jakarta to pursue Indonesian army generals and militia figures, recently securing a commitment that an ad hoc tribunal would investigate atrocities that were committed before and after the East Timor autonomy vote. When first announced, the ad hoc tribunals were to investigate atrocities committed only after the vote.

The two governments also discussed Timor border issues, with Mr Howard seeking assurances that the Indonesian military would play its part in securing the border with East Timor. President Wahid, meanwhile, asked for more assistance in resettling East Timorese refugees.

Discussions on security issues were limited, though President Wahid said later that there needed to be a "reformulation" of the security dialogue given the "changed geopolitical and geo-military" situation. The Australia Indonesia security treaty was abrogated by Jakarta at the height of tensions over East Timor.

Mr Howard endorsed President Wahid's push for greater autonomy in regions such as Aceh and Irian Jaya that have been plagued by violence after the establishment of separatist movements.

At a parliamentary luncheon, Mr Howard and the Opposition Leader, Mr Kim Beazley, warned that the price of failure to forge closer ties would be high. "There is much to be gained should we succeed. But there is much to lose should we fail," Mr Howard said. Mr Beazley said: "National interest on both sides dictates that we cannot step back from each other."