Rob Taylor, Canberra – Australia and Indonesia are set to resume military ties frozen in the diplomatic fallout from East Timor, following a two-day visit by Indonesian Foreign Minister Hassan Wirayuda.

But a half-hour meeting between Prime Minister John Howard and Dr Wirayuda in Sydney today resulted in no announcement on whether Mr Howard would meet with Indonesian President Megawati Sukarnoputri in Jakarta next year.

Dr Wirayuda, the first senior Indonesian MP to visit Australia since President Megawati's appointment, said the neighbours could soon resume what he called soft military contacts. But there would be no early return to the pre-East Timor era exercises involving Australian troops and Indonesia's elite Kopassus special forces battalion, he said.

He said the 1999 East Timor crisis and a subsequent militia rampage through the newly-independent territory had abruptly terminated a security treaty between the two nations.

But Jakarta was now seeking a period of stability in relations, including a gradual restoration of military links. "I think we can start on soft projects, exchange of officers, training and also perhaps exchange of visits," Dr Wirayuda said. "But not hard ... joint military exercises at this stage."

He said his visit, aimed at repairing relations battered by East Timor and a pre-election stand-off over asylum seekers on the MS Tampa, had already borne fruit. "This present visit to Australia has been extremely useful in instilling a new sense of urgency to nurture and to build on Indonesia-Australia bilateral ties," he said.

He also believed talk of a rift had been overblown. "Fortunately, they are more perceptions than reality," he said.

Dr Wirayuda held talks with Mr Howard this afternoon, canvassing in part a meeting between Mr Howard and President Megawati in Jakarta next year.

A spokeswoman for Mr Howard described the talks as friendly, with people smuggling and the US-led war on terrorism a focus.

But there was no announcement on whether Mr Howard would meet with President Megawati, after she refused his phone calls during the Tampa episode, bringing relations to a new low.

Dr Wirayuda yesterday secured Australia's agreement to co-host with Indonesia a regional summit on people smuggling after Canberra dropped its push for a bilateral approach to the problem.

Labor foreign spokesman Kevin Rudd, who met with Dr Wirayuda earlier, said the government had finally begun to restore a bilateral relationship ignored since the coalition's 1996 election. "But one single swallow doth not a summer make when it comes to a ministerial visit in the reverse direction," he told AAP.

Foreign Minister Alexander Downer said Australia wanted to rebuild defence ties with Indonesia. But there would be no return to the strong military links of the previous Labor government.

"We are not going to go back to the type of relationship that existed under the Keating government where the Australian Defence Force was required to train ... the Indonesian special forces and have that intimate relationship with the Indonesian military," he said.