Lindsay Murdoch, Jakarta – Indonesia's President Abdurrahman Wahid has ordered a shake-up of the country's official news agency, Antara, removing its editor-in-chief and demanding it be more independent.

For months last year Antara published fiercely anti-Australian stories about the role of Australian troops in East Timor which prompted complaints from Australian diplomats in Jakarta about their accuracy.

Australian diplomats and officials believed Antara's coverage was designed to fuel anti-Australian sentiment in Indonesia and deflect attention from atrocities committed by its military and proxy militias in East Timor. The Australian embassy in Jakarta was the target of anti-Australian demonstrations over more than 40 days that included the firing of guns and throwing of Molotov cocktails.

Mr Wahid ordered the removal of Antara's head, Mr Parni Hadi, who had a close association with the former Habibie government, and replaced him with a columnist and writer, Mr Mohamad Sobary.

But soon after a ceremony where Mr Sobary, 47, was installed in the job, Antara carried a report claiming that most of its journalists and employees objected to the appointment.

Mr Hadi, who took charge of the agency in 1998, snubbed the ceremony. Acting State Secretary Mr Bondan Gunawan, who swore in Mr Sobary on behalf of Mr Wahid, quoted him as saying that abuses of information for political purposes must end. "A news agency, although state owned, must be able to deliver open and honest news because the state is not allowed to lie to its people," Mr Bondan said. He told Mr Sobary, a friend of Mr Wahid, not to cover up bad news and said the President would be disappointed if Antara did not become more independent.

Meanwhile, Mr Wahid is losing of his closest aides, Ms Ratih Hardjono, 40, who denied accusations before a parliamentary committee last month that she was an Australian spy.

Ms Hardjono's resignation as presidential secretary comes after months of tensions among staff at the palace following the sidelining of the military-dominated State Secretariat that had wide powers and authority under the 32-year Soeharto presidency.

The spy rumours are believed to be have been circulated by people who saw Ms Hardjono, a former correspondent in Australia for Indonesia's Kompas newspaper, as having too much influence with the President. A presidential spokesman told journalists Ms Hardjono was resigning to concentrate on her wedding.