Australian officials will travel to East Timor this week to continue discussing plans for a regional asylum processing centre.

Foreign Minister Stephen Smith said today he had spoken with East Timor's foreign minister Zacarias da Costa about the plan.

"We have decided in the first instance our officials would deal with it and then he and I will have a further conversation... to progress the matter," Mr Smith told ABC Television. "We will be sending officials to East Timor in the course of this week to start a detailed discussion."

He also clarified that at this stage East Timor is the only country Australia has approached to host a regional processing centre, although The Weekend Australian reported that Manus Island, in Papua New Guinea, is a possible site.

"We haven't opened up, and are not proposing to open up a conversation with another country," Mr Smith said.

Julia Gillard revealed last week that she wants to set up a processing hub in East Timor for unauthorised boat arrivals that make it to Australia. But the Prime Minister has come under fire for failing to discuss the idea with East Timor Prime Minister Xanana Gusmao before announcing the policy.

But Mr Smith said the policy was announced in an "entirely appropriate manner", noting Ms Gillard had spoken to President Jose Ramos-Horta about it. "He is a person who is integral to the operations of East Timor," Mr Smith said, adding that he has since spoken to Mr Gusmao.

"And the end result of that conversation was prime minister Gusmao saying he wanted President Ramos-Horta to take charge of discussions. People who expect you can announce it with a bow-tie on top, or announce it on day one, frankly don't appreciate the reality of a very difficult issue."

Mr Smith today also announced that former ambassador to Iran Greg Moriarty had been nominated as Australia's next ambassador to Indonesia. He said Mr Moriarty was well qualified to take over the job from Bill Farmer, who has been serving in the post since 2005.

"He's a very good, professional, department of foreign affairs officer," Mr Smith said. "He will be a first-class ambassador to Indonesia."

Mr Moriarty, who is "well known" to Indonesia's foreign minister Marty Natalegawa, has recently dealt with some delicate issues, including the repatriation of bodies from the Sundance Resources plane crash in the Congo.