Sydney – Senior Indonesian and Australian ministers sat down yesterday for long-awaited talks marking a thaw in bilateral ties still strained over East Timor. The two-day meeting, originally planned for October but cancelled at short notice by Jakarta, is seen as an important precursor to a visit by Indonesian President Abdurrahman Wahid.

One senior official said that although no major breakthroughs were expected, the fact that the bilateral meeting was taking place at all was a sign of progress. "The fact that this forum is happening in itself is quite an achievement," he said, adding that the atmosphere had been cordial. "It's a continuation of dialogue between us and one of our most important and closest neighbours. We want to keep the dialogue going."

The five-strong Indonesian delegation is being led by Foreign Minister Alwi Shihab, who said the talks were a positive step forward. "This meeting is a change from a downturn to an upturn in our relationship, and we do hope this will bring a positive outcome not only politically but also in economic matters," he said.

Among nine Australian ministers taking part are Foreign Minister Alexander Downer, Treasurer Peter Costello and Deputy Prime Minister John Anderson.

Before the talks started, Mr Downer stressed the fundamental common interests of the two countries and said differences over East Timor had to be dealt with maturely.

"We do share a fundamental congruence of interests in the security and prosperity of our region," he told parliament. "Indonesia's territorial integrity, which we fully support, its prosperity and respect for the rights of all its people are central to the achievement of this objective. We are committed to work with Indonesia to develop the relationship further on the basis of mutual interests and mutual respects."

The government's much-vaunted defence White Paper, released on Wednesday, said a key priority for Canberra was rebuilding its defence relationship with Jakarta.