Michael Bachelard, Mark Kenny, David Wroe – Australia's asylum-seeker measures in Indonesia have been thrown into disarray with Jakarta pulling the plug on all military co-operation in retaliation for the Abbott government's refusal to explain the phone tapping of Indonesian President Susilo Bambang Yudhoyono.

Relations between Canberra and Jakarta have descended to their lowest level since the East Timor crisis as the Indonesian President ordered his country's troops to stop joint exercises with Australians in Darwin, and the navy to halt any joint patrols to combat people smuggling.

"How can we do all this if we are not sure that there is no tapping of our military, which is working for the interests of the two countries?" Dr Yudhoyono said.

The sudden deterioration in ties sent the Abbott government into crisis talks, with Prime Minister Tony Abbott requesting time to address the House of Representatives at short notice to emphasise his respect for the relationship and his desire to see it repaired.

"I want to express here in this chamber my deep and sincere regret about the embarrassment to the President and to Indonesia that's been caused by recent media reporting," he said for the second time that day.

"The President indicated that he would shortly be writing to me. I would like to reassure the House that I will be responding to the President's letter swiftly, fully and courteously. As always, I am absolutely committed to building the closest possible relationship with Indonesia, because that is overwhelmingly in the interests of both our countries."

In response, Opposition Leader Bill Shorten described it as a shared problem. "This is indeed a team Australia moment. This is something that has happened to both Indonesia and Australia. We need to walk this road together. Other nations have resolved these similar issues, we can too," he said.

Only last month Indonesian defence minister Purnomo Yusgiantoro agreed to deploy his navy's maritime patrol aircraft to monitor people-smuggling activity along southern coastal areas, and to beef up naval patrols.

An Indonesian navy spokesman confirmed on Wednesday night that these patrols had been suspended, but said the moves would not affect the police force, which provides most of Indonesia's assistance to Australia on people smuggling.

Dr Yudhoyono said after a crisis meeting at the presidential palace with his foreign minister, co-ordinating minister for security and intelligence chief that the suspension of military co-operation would remain in place until he had obtained "a clear explanation [from Australia] and for Australia to take responsibility".

"God willing, tonight I will send a letter to Tony Abbott demanding Australia's official stance and explanation... and then we will see what we can do in the future," he said. The explanation should "not be given through the Australian domestic setting", he added.

The President spoke warmly of the relationship with Australia, but said he had ordered the suspension or review of several areas of co-operation, particularly on information sharing and the exchange of intelligence.

"I have also asked my military to temporarily stop the joint army and navy exercises and also to temporarily stop any co-ordinated military operations, the joint patrols," he said.

"As you know, the people-smuggling issue has troubled both Indonesia and Australia, so we have co-ordinated military operations or co-ordinated patrols in the ocean, but until this issue is all clear it will be stopped."

Dr Yudhoyono also called for a binding code of conduct between Australia and Indonesia on co-operation on military, intelligence and people-smuggling issues. He said the decision by Australia to tap his mobile phone and those of his wife and their inner circle was "difficult to digest".

"It is no longer the Cold War era. It was a common thing then to spy on countries of different blocs, but today it is not like that any more. Hostile countries can tap each other, but between Indonesia and Australia we are not of different blocs, let alone hostile each other... why tap a friend, not foe?"

[With Karuni Rompies.]