Australia would have stooped to a "new low" if reports its navy paid people-smugglers bound for Australia thousands of dollars to turn back their boat are true, an Indonesian government official said on Saturday.
A boat captain and two crew members arrested this week on suspicion of human trafficking told Indonesian police that Australian authorities had paid each of them $US5,000 ($A6450) to turn back their vessel with 65 migrants on board.
"Under Australian's push-back policy we have been consistently saying they are on a slippery slope," Indonesian foreign ministry spokesman Armanatha Nasir said.
"Should this situation be confirmed and it turns out to be true, it would be a new low for the way the government of Australia handles the situation on irregular migration."
Nasir said it would be the first time such an incident occurred involving Australian authorities.
Indonesian foreign minister Retno Marsudi raised the issue with Australia's ambassador to Indonesia, Paul Grigson, on the sidelines of a foreign policy conference in the Indonesian capital, Jakarta.
"He promised to bring my question to Canberra," Marsudi told reporters. "We are really concerned, if it is confirmed." Indonesia plans to ask Australia for clarification, he said.
Australian authorities could be accused of people smuggling over the issue, an international law expert says. The prime minister, Tony Abbott, did not deny the claims when questioned about it on Friday.
Professor of international law at the Australian National University, Don Rothwell, says if proven the activity could be tantamount to people smuggling under current regional protocols.
"People smuggling is defined with the protocol and to that end the provision of monies to people who are engaged in people-smuggling activities to take persons from a place on the high seas to another place, such as Indonesia, is clearly a people smuggling-type activity," he told the ABC.
He said the claims also raised questions because Australia was a party to the 2000 protocol to disrupt people smuggling.
Rothwell said a lot would depend on how Australia's regional partners responded to the allegations. The Indonesian government appeared to be taking them seriously, he said. "We'll no doubt hear from Indonesia in the future about this."
Abbott did not deny the allegations in a radio interview but he did say officials were being "incredibly creative" in following Australia's policy to turn back the boats.
"What we do is stop the boats by hook or by crook," Abbott said. "We have stopped the trade and we will do what we have to do to ensure that it stays stopped."
He repeatedly declined to confirm whether Australia was investigating the claims.
The finance minister Mathias Cormann said the allegation was not an accurate reflection of what was happening.
"The prime minister has essentially stuck to his very long-standing practice of not to provide a running commentary on operational matters," he told Sky News on Saturday.
"He didn't confirm or deny, he didn't make comment one way or the other. He certainly didn't indicate that payments have been made."
Labor has called on Abbott to emphatically deny Customs paid people smugglers to turn back asylum seeker boats.
The opposition immigration spokesman Richard Marles said Abbott's refusal to deny the practice had left the door wide open to the idea the government was handing wads of taxpayer's cash to smugglers.
"Really it leaves one with the only possible assumption that that may well have been exactly what happened," he told reporters in Melbourne on Saturday.
[Reuters and Australian Associated Press contributed to this report.]