Indonesia urged Malaysia to cease "aggressive" claims and negotiate a territory dispute that has seen warships and fighter jets deployed to oil-rich waters off the coast of Borneo.

Foreign Minister Hassan Wirayuda, speaking ahead of talks with his Malaysian counterpart Syed Hamid Albar, said a diplomatic solution was needed in the row, but he stressed that no concessions would be made in Wednesday's meeting.

"International law requires a border dispute to be solved through negotiations and not by unilateral, aggressive claims," Wirayuda said. "We are not offering anything to Malaysia because we are convinced that our claims to the land, sea, continental shelves and exclusive economic zones have a strong basis," he said.

Wirayuda's remarks came one day after Syed Hamid said his country would not compromise on its territorial sovereignty even as it sought to avoid a confrontation and damage to friendly ties.

Tensions appeared to be easing in the disputed area Wednesday with Indonesia pulling out five of seven warships, despite continuing anti-Malaysian protests.

Claims by both countries to an area of the Sulawesi sea, near the land border between Indonesia's East Kalimantan province and Malaysia's Sabah state were recently unbalanced by Kuala Lumpur's granting of oil exploration rights.

Warships from both countries have come into close contact in the area several times since February 16 when energy giant Shell was given a concession in the area by Malaysia's state oil company Petronas.

Jakarta says Kuala Lumpur's sovereignty in the area extends only about 19 kilometers from Malaysia's Sipadan and Ligitan islands and the blocks awarded by Petronas are outside this zone.

Protestors, already riled by Malaysia's expulsion of Indonesian migrant workers, have gathered in major cities, volunteering to fight and demanding that the country mobilises to "crush Malaysia".

Malaysia has accused the Indonesian media of trying to blow the issue out of proportion, while observers say Jakarta is using the issue to detract from problems at home, including an unpopular fuel price hike.

Indonesian President Susilo Bambang Yudhoyono, who toured islands near the disputed area on Tuesday, has played down the incident, saying it would not affect cordial ties with Kuala Lumpur.

The two countries have locked horns over the territory before. A dispute over the ownership of Sipadan and Ligitan island ended in December 2002 with an International Court of Justice ruling that the islands belong to Malaysia.

Indonesia declared war against Malaysia following sporadic tensions over the future of Borneo island in 1963 after the British relinquished control. The conflict ended three years later as Jakarta focused on internal problems.

Indonesian navy spokesman Rear Admiral Malik Yusuf said Wednesday that five of its vessels had pulled out of the disputed region but could be redeployed again if necessary.

"We have withdrawn five ships. But they can be dispatched again in the area when the situation requires," Yusuf told told AFP, adding that Malaysia too had two warships in the area.