Australia and Indonesia have agreed a pact to put a damaging spy row behind them, paving the way for the resumption of full defence cooperation, Foreign Minister Julie Bishop said Tuesday.
Ties between the neighbours sank to their lowest point in years in November after reports Australian spies tried to tap the phones of President Susilo Bambang Yudhoyono and his inner circle.
Jakarta recalled its ambassador from Canberra and suspended cooperation in several areas over the incident, including efforts to stop people-smuggling boats reaching Australia.
Yudhoyono called for a code of conduct to govern behaviour during talks with Australian Prime Minister Tony Abbott in June, and the agreement reportedly includes a promise from Canberra never to use its intelligence agencies to harm its neighbour.
"We have reached agreement on the joint understanding and we are currently arranging a time to sign it," Bishop said Tuesday.
The deal will be signed in Indonesia by Foreign Minister Marty Natalegawa, with outgoing president Yudhoyono a witness, her office said.
Bishop told Fairfax Media the agreement was a "concise statement of our commitment to respect each other's sovereignty... and not to harm each others interests".
"This means we will not be using our intelligence resources to harm Indonesia's interests," she said, adding that full defence, border security and intelligence cooperation would be restored.
Allegations that Australian spies tried to tap the phones of Yudhoyono, his wife and several top officials in 2009 sparked one of the worst diplomatic crises between the two strategic allies in years.
Reports at the time said that Australia's electronic intelligence agency tracked Yudhoyono's activity on his mobile phone for 15 days in August 2009, when Labor's Kevin Rudd was prime minister.
The list of tracking targets also included his wife Ani, former vice president Jusuf Kalla, the foreign affairs spokesman, the security minister and the information minister, the reports said.
Jakarta responded furiously to the reports, which were based on documents leaked by US intelligence fugitive Edward Snowden, by suspending bilateral cooperations in key areas.
Ties were further strained by Australia's policy of pushing boatloads of asylum-seekers back to Indonesia when it was safe to do so.
Indonesia and Australia are close strategic and trading partners and have traditionally worked together in many areas, including on anti-terrorism initiatives and on the sensitive issue of asylum-seekers. In June, Abbott said he was confident that ties were back on track.
"One of the great things about this relationship is that on those rare occasions when there are problems, we talk them through. We speak candidly to each other, and that's exactly what's happened between myself and (the) president today," he said.