Papuan nationalists have protested in Canberra against what they say is an occupation of Papua New Guinea territory by the Indonesian military.

About a dozen demonstrators, some wearing indigenous costume, chanted slogans and sang songs outside the Indonesian embassy against the alleged incursion.

Independence group, the West Papua National Authority, accused the Indonesian army of occupying more than six kilometres of PNG territory across the border from Indonesia's Papua province.

"A so-called free-trade zone established between Indonesia and Papua New Guinea has been annexed by Indonesian soldiers," group foreign affairs coordinator Jacob Rumbiak said.

"This militarisation threatens West Papuan refugees living in PNG and West Papuans living in their own homes along the border. "It is typical of what is happening across all of West Papua."