Indonesia has backed down on a threat to expel foreign aid workers from Aceh, granting them a two-month extension to continue relief efforts.

As the Indonesian government puts the finishing touches on a mammoth five-year reconstruction plan for the tsunami-shattered province, the office of top welfare minister Alwi Shihab released a statement saying foreigners could stay for the time being.

It cited delays with the recovery blueprint for the policy change.

The government had previously said relief agencies not directly involved in reconstruction work must quit the politically-sensitive province by March 26.

That date marks the three-month anniversary of the earthquake and tsunami that devastated Aceh's coast, swallowing entire communities and killing more than 126,000 people.

Alwi said foreign military personnel in Aceh were also welcome to remain if they held valid visas, or if there was a special request from the government for them to stay.

"There are just a handful of countries with military personnel still carrying out humanitarian work in Aceh, and they won't be asked to leave unless their visas have expired," he told the Jakarta Post.

The decision was reversal on Alwi's previous insistence that the government would limit the number of foreign aid groups to those working on reconstruction.

Analysts had interpreted the March 26 deadline as evidence that Indonesia intended to re-impose a clampdown on the province, where security forces have waged a long-running battle against separatist rebels out of the international spotlight.

There are close to 160 aid groups operating in Aceh, ranging from large United Nations agencies like UNICEF to small faith-based groups from around the world.

A spokesman for the international aid group CARE said the agency had been unconcerned about the deadline, because it had a long-term reconstruction role in Aceh.

But a spokesman for the International Committee of the Red Cross in Aceh, Bernt Apeland, said the decision was welcome. "The emergency phase is now over," he told AAP. "But there are still needs and problems which need to be met in the weeks and months ahead, so it's a very positive development." A European aid official told Associated Press the government had realised "there was no way they could handle the situation in areas like education and health and sanitation without these international organisations."

The government has largely completed the blueprint for Aceh's reconstruction and has allocated 45 trillion rupiah ($A6.31 billion) for rebuilding the province within the next five years.

National Development Planning minister Sri Mulyani Indrawati said the government would build sea walls and plant mangrove forests along Aceh's coast to reduce the impact of possible future tsunamis.

But Jakarta is still wrestling with the problem of how to relocate up to 400,000 people left homeless by the tsunami and who used to live in beachside communities.