Wayne Miller, Bali and agencies – Indonesia has lashed out at Australia, the United States and its allies for "a gruesome war" in Iraq, saying it had brought human suffering to a new level.

The country's Foreign Minister, Hassan Wirajuda, launched his broadside during an international conference on people smuggling in Bali yesterday – after first thanking Australia for co-chairing the meeting of 32 countries.

"Much to our dismay, we meet today under the shadow of surging unilateralism," Dr Wirajuda said. "That unilateralism has brought about a gruesome war in Iraq and a new level of human suffering. In the process, the spirit of multilateralism embodied in the UN has been shunted aside."

There have been large demonstrations against the war throughout Indonesia, the most populous Muslim country in the world. But Australia's Foreign Minister, Alexander Downer, said Australia had gone out of its way to tell Indonesia the war in Iraq was not a war against Islam.

"Both the Prime Minister and I very much appreciate the way that domestically Indonesia has managed to keep the population under control," Mr Downer said in Bali. "The demonstrations didn't get out of control, there was no significant violence and I think the Indonesian Government deserves a good deal of credit for its careful management of this difficult issue."

The Prime Minister, John Howard, is due to meet the United Nations Secretary-General, Kofi Annan, soon to support a permanent non-veto seat for Indonesia on a revamped Security Council.

Dr Wirajuda's comments were the harshest yet by the Indonesian Government, which strongly opposed the American decision to invade Iraq without the support of the UN.

But Mr Downer played down Dr Wirajuda's comments, saying Indonesia had to manage its problems in its own way. He said the relationship between Australia and Jakarta had strengthened considerably over the past 18 months.

The UN did not always have the ability to resolve conflicts in the international community, he said. "It didn't achieve a very good outcome in Rwanda, where 700,000 people were killed. It achieved a good outcome in East Timor. It varies." The conference focused on people-smuggling and related transnational crime. Reports were delivered behind closed doors.

Dr Wirayuda said Indonesia would work with international authorities to return asylum seekers to their countries of origin. He said it was against his government's policy to help boats continue their voyage to Australia.

But Indonesia also said it would not detain boat people who arrived on its shores, because it did not want to encourage the development of camps of thousands of boat people like those that grew up on Galang island, off Sumatra, following the Vietnam War.

Today's talks will deal with co-operation to combat terrorism.