An Australian defence think-tank says there's a growing risk of Indonesia reverting violently to a military authoritarian government.

The Australian Strategic Policy Institute says that unlike the Suharto regime, such an Indonesian Government might be xenophobic and anti-Australian.

In a report on Australia's defence after September 11, the Institute says there's evidence that al-Qaeda members fleeing Afghanistan have moved to Indonesia and built links with Islamic groups.

The Institute says the war on terror has put more pressure on the government of Megawati Sukarnoputri. The report says polarisation between Islam and the West has increased the appeal of Muslim politics to many Indonesians.