Indonesia has recalled its ambassador following revelations Australia had spied on the country's president.
It was also poised to expel Australian diplomats from Jakarta as relations between the two countries continued to deteriorate.
Documents leaked by former defence contractor Edward Snowden revealed the Australian Signals Directorate, formerly known as the Defence Signals Directorate, had tracked the mobile phone of Indonesian president Susilo Bambang Yudhoyono, his wife and chief ministers for 15 days in August 2009.
Prime Minister Tony Abbott declined a request by Indonesia to provide more information on the spying.
"We have a very good relationship with Indonesia," Abbott told reporters.
"Today may not be the best day in that relationship but it is in noone's interest to do or say anything that would jeopardise that relationship."
Indonesia's influential security affairs minister Djoko Suyanto went on national television in that country to demand Australia elaborate on the spying within two days.
His remarks followed a statement by Indonesian foreign minister Dr Marty Natalegawa accusing Australia of violating human rights.
"In short, it has not been a good day in the Indonesia Australia relationship," Natalegwa said.
Former Foreign Affairs Minister Bob Carr said federal governments should not hesitate to decline proposals to spy on foreign nations should the risks outweigh the benefits.
"When governments -- defence minister, foreign minister or attorney generals -- sign off on proposals for surveillance coming from security agencies they should be weighing very, very carefully the ... gain from any material collected and shouldn't hesitate to knock back a proposal from these agencies [such as] ASIS, Defence or ASIO if they think the risk is real," Carr told ABC NewsRadio this morning.
He said the Federal Government should discuss with the US the "suffering" Australia has endured as a result of "American inadequacies" that resulted in Edward Snowden stealing the 200,000 plus NSA documents.
"I think Australia has an obligation to talk with the United States about how we have suffered because of American inadequacies in supervising and protecting intelligence gathering."
David Irvine, head of Australia's domestic intelligence agency ASIO, told a Senate committee he had a "good idea" of the intelligence it shared with allied nations.
"We have a good idea of what information we have shared with allied agencies," Irvine said.
"Material released by Snowden that is now in the public realm is of very great concern."