Indonesian President Susilo Bambang Yudhoyono has ruled out allowing Australian troops to be stationed on its soil or letting them carry out pre-emptive strikes against extremists on its territory.

In an interview with The Bulletin magazine, the newly elected Yudhoyono said relations with Australia would be a priority for his government but an excessive Australian security presence could be seen as intervention.

"With good cooperation, there will be no need for the presence of the Australian military or police in Indonesia," he said. "That would only create problems for Indonesian people, who could wrongly perceive that as a form of intervention."

Relations between the two countries have been prickly since Australia led international intervention in East Timor in 1999 to stop a bloodbath by Indonesian troops and their militia proxies. However, police and other cooperation against Islamic extremists was stepped up after the 2002 Bali bombings. It was further increased after September's bombing of the Australian embassy in Jakarta.

Prime Minister John Howard's government has stirred controversy by raising the possibility of pre-emptive strikes in the territory of unspecified neighbours to stop terrorist attacks. Those statements have been widely interpreted to mean Indonesia despite government denials.

Since Howard's re-election last month, which coincided with that of Yudhoyono, the Australian government has talked of a new security pact with its giant neighbour in a bid to mend ties.

Yudhoyono told The Bulletin a discussion forum was more important. "We don't need to create security or defence pacts because even in Southeast Asia we've never thought to create such pacts," he said. "What we need is a forum for dialogue between Indonesia and Australia to initiate talk on how regional security can be managed. I will push strongly to create such a forum."

The former general also promised to take stern action against terrorists operating out of Indonesia. The Al-Qaeda-linked Jemaah Islamiyah, which is blamed for numerous attacks including the Bali blasts, is based in Indonesia.