A senior Indonesian politician has demanded an apology from Australia over an attempt to have him testify at a politically sensitive inquest into the Balibo Five deaths.

The row involving Jakarta Governor and presidential hopeful Sutiyoso is threatening to escalate into an international incident, with 500 protesters gathering outside the Australian embassy in Jakarta. Angered by what Sutiyoso called "insulting" treatment by NSW police, the protesters demanded Australia offer an immediate apology.

Sutiyoso accused NSW Police of using a master key on Tuesday to enter his Sydney hotel room to deliver a request that he testify at an inquest into the deaths of five Australia-based newsmen at Balibo in East Timor on October 16, 1975.

"They barged into my room after forcing the hotel to give them a duplicate key," he told reporters in Jakarta after cutting short his Australian visit, made at the invitation of the NSW government.

"I really feel slighted by such treatment. If there is no apology, I will deem it as arrogance on their part, and do we need to continue relations with Australia? If the Australian government apologises and says it was a case of negligence, then we will think of continuing our relations."

Indonesia has since asked Australia's ambassador in Jakarta, Bill Farmer, to explain why Sutiyoso was approached to testify. An Australian embassy spokesman in Jakarta said the protest had grown from about 300 to about 500, but that it was "peaceful and relatively orderly". The embassy was in lock-down and would remain that way until the crowd dispersed, he said.

Deputy NSW Coroner Dorelle Pinch told the Balibo inquest she had asked a NSW Police officer assigned to assist the inquest to go to Sutiyoso's hotel to deliver a personal invitation from her to attend. She said she'd earlier decided to issue the politician with a summons, but abandoned the plan after receiving additional advice about whether she could compel Sutiyoso to attend.

Pinch said she decided to seize a small "window of opportunity" after learning on Tuesday that Sutiyoso was in Sydney. But Sutiyoso "declined to attend the inquest" citing previous engagements, Pinch said. She denied any suggestion that the police officer involved had gained unauthorised entry to Sutiyoso's hotel room.

The Australian embassy stressed that police had not been acting on behalf of the Australian government in requesting he give evidence.

"The thing that needs to be emphasised in this case is that it was only a request, an invitation from coronial police. Mr Sutiyoso was not forced to come to the inquest," embassy spokesman John Williams told ElShinta radio.

According to evidence earlier given to the inquest, Sutiyoso had allegedly been part of "Team Susi", one of the Indonesian military units that advanced on Balibo the day the journalists were killed, Pinch said. Sutiyoso, a retired Lieutenant General, served in the military for three decades and was part of Indonesia's occupation of East Timor.

But he denied that he played any role in the Balibo Five killings. "I did not go to Balibo, my troops were not in Balibo. I was in another place but not Balibo," he said.