Jakarta – Indonesia's president said on Tuesday that stabilising the world's most populous Muslim nation, rocked by devastating bomb attacks on Bali island last October, would be a top priority for her in 2003.

In a year-end speech broadcast on television, Megawati Sukarnoputri said a landmark peace deal for restive Aceh was still "very fragile", while a key aim would be to cool separatist demands in Papua, Indonesia's other rebellious province.

The Bali bomb blasts were carried out by militant Indonesian Muslims and killed nearly 200 people, mainly foreign tourists. The atrocity was the worst terror attack since last year's September 11 suicide attacks on New York and Washington.

Megawati said police had successfully cracked the network responsible for the bombings and had gathered preliminary evidence and convincing confessions.

"We hope this terrorist network can be uncovered to its deepest roots," Megawati said in her pre-recorded address.

Indonesia has arrested more than 20 Indonesians suspected of links to the atrocity. Many have ties to Jemaah Islamiah, a regional network of militant Muslims.

Megawati is in Bali for New Year's Eve events on the island, and is due to give a separate, short speech just before midnight.

In her address broadcast on TV, Megawati said little else about the Bali attacks, and did not refer to the problem of Islamic militancy in Indonesia, which has fuelled perceptions abroad that religious extremism is taking hold.

The president said 2002 was marked by some successes on the security front, such as Jakarta's ability to calm unrest in the Molucca islands and the Poso region in the country's east.

While the December 9 Aceh peace deal had been lauded, it was still the first step in a complicated process to resolving Aceh's woes and trust needed to be built for it to stick, she said.

There has been a reduction in clashes between soldiers and rebels of the Free Aceh Movement since the accord for the staunchly Muslim province on Indonesia's northwestern tip was signed, although some fighting has still broken out.

"I am aware that the conditions that cover this first step are very fragile," she said of the peace deal.

"Long-rooted disappointment, fears and anger have fuelled hatred and enmity among us. Logically, only if we can cool that attitude of enmity can we find an even better settlement." She said the government wanted to build stronger foundations next year for resolving independence demands in Papua, a largely Christian and animist province in the east. Megawati added that she did not want Papua to become a problem on the scale of Aceh.

A low-level guerrilla conflict has simmered in Papua for decades, unlike Aceh where the independence war has killed more than 10,000 people since the mid-1970s.

But Megawati said a special autonomy package for Papua, unveiled last year, would be the basis of any settlement.