Yudhoyono Abbott
Australian PM Tony Abbott and Indonesia's President Susilo Bambang Yudhoyono are embroiled in a diplomatic row (Reuters)

Indonesia has suspended military and intelligence cooperation with Australia in an escalating diplomatic row sparked by reports that Canberra spied on President Susilo Bambang Yudhoyono.

Yudhoyono ordered Indonesian security forces to halt joint military exercises, intelligence exchange and anti-people-smuggling operations with Australia until Canberra provided an official response to allegations that his phone, that of his wife and those of other senior government officials were tapped.

"It is not possibleto can continue our cooperation when we are still uncertain that there is no spying towards us," Yudhoyono said.

"I asked for temporary termination of cooperation on intelligence exchanges and information sharing.

"I also asked for the termination of joint exercises between Indonesia and Australia, either for army, navy, air force or a combination," he said. "It is no longer the Cold War era."

The move landed freshly elected prime minister Tony Abbott in hot water.  During his election campaign, Abbott pledged to stop the flow of migrants to Australia's Christmas Island from Indonesia and and urged Jakarta's "essential" cooperation to stop people-smugglers at the source.

Since his election, the conservative PM has adopted a tough stance over the spying allegations, defending Australia's right to protect its national security by gathering intelligence.

He told parliament that no explanation or apology was owed to Indonesia.

After Yudhoyono's announcement, he modified his position and said he would do everything he "reasonably can" to repair the relationship.

Australia's best friend

"I deeply and sincerely regret the embarrassment that media reports have caused President Yudhoyono, who is a very good friend of Australia, perhaps one of the very best friends that Australia has anywhere in the world," Abbott said.

"I do understand how personally hurtful these allegations have been, these reports have been, for him and his family."

The diplomatic row started after documents leaked by NSA whistleblower Edward Snowden revealed that the Australian embassy in Jakarta was used as a hub for US intelligence scooping.

Later documents leaked to the Australian Broadcasting Corporation and the Guardian listed the names of Yuhoyono and First Lady Ani Yudhoyono as monitoring targets by the Australian Defence Signals Directorate (now the Australian Signals Directorate).

The agency reportedly attempted to listen to the president's conversations at least once and tracked calls made to and from his handset for more than two weeks.

The spying allegedly took place in 2009 when Abbott was not prime minister.