The Australian Defence Force (ADF) chief says Australia's defence relationship with Indonesia is as good as it has ever been.

Relations between the two neighbours suffered a major setback when Australian troops were sent into East Timor in 1999. They were sent there to stem the violence after East Timor's vote for independence from Indonesia.

In his first public speech since becoming ADF chief, Air Chief Marshal Angus Houston has said relations have recovered since then, partly because Australia was quick to help Indonesia with the tsunami relief effort.

He says defence cooperation is returning to the era before 1999. "I have seen General Sutarto twice from the time it was announced I was going to be the chief of the Defence Force," he said.

"I met with him twice. Once in Singapore, once in Australia. Of course General Cosgrove was hosting him, just before he departed the job. "In terms of the single service chiefs, the relationship has I think never been better."