Indonesia expects Australia will agree to limit its spy operations in the country but says it is not ready to sign off on the final terms for a code of conduct.

Foreign minister Marty Natalegawa says negotiations towards resuming full diplomatic cooperation with Australia are progressing, but are yet to be formalised.

Indonesia suspended cooperation in November after revelations that Australian spies had tapped the phone of president Susilo Bambang Yudhoyono and members of his inner circle.

It recalled its ambassador from Canberra, announced a review of all agreements with Australia, and suspended cooperation on people smuggling, military exercises and intelligence sharing.

It was in response to Prime Minister Tony Abbott's initial refusal to explain the spying revelations. The attempts to tap phones happened under the previous government but were revealed in leaked documents obtained by Guardian Australia and ABC News two months after the Coalition took office.

A key condition of Indonesia agreeing to resume full diplomatic relations is Australia signing up to a code of conduct.

Dr Natalegawa said a return to full cooperation was "not too complicated".

"We are having the more important process of having a similar expectation of what a code of conduct would entail," he said.

Dr Natalegawa says he has met his Australian counterpart, Julie Bishop, on a number of occasions recently and they have been discussing what the code should include.

"And as I had said before, essentially, what we foresee is a reiteration of the basic principles of our bilateral relations, especially the Lombok Treaty," he said.

"And then we will have a commitment to do certain things, and most importantly a commitment not to do certain things."

Dr Natalegawa says it is clear that the latter part of the agreement will include a commitment to "refrain from the employment of intelligence resources" in a manner that would be "inimical" or damaging to the other country.

"This was a point which was made on many occasions by the current Australian Government and we just wish to put that on a piece of paper," he said.

But he has not said how long it was likely to take before any agreement could be formalised.

Yudhoyono wants final approval of code of conduct

Last November Mr Yudhoyono reserved the right to give final approval to the code of conduct.

"I will check the draft myself, whether it's been done properly and answered all the wishes of Indonesia - after the tapping that occurred," he said.

"After the protocols and ethical codes have been approved, I would like to have the signing of the codes be done by the heads of states, I as the president and Prime Minister Abbott, as prime minister."

Only once that is completed, will Indonesia be willing to resume full diplomatic relations.

But Indonesia is preparing for a presidential election on July 9, with a potential run-off in September if the first poll is inconclusive.

Mr Yudhoyono has reached his two-term constitutional limit and is therefore ineligible to run again.

His party has also been plagued by corruption scandals and falling popularity.

Mr Yudhoyono's Democratic Party performed so badly in this month's legislative elections it is now languishing in the ranks of the minor parties and has abandoned plans to run for the presidency.

If diplomatic relations are not mended in the next few months, the Australian Government could be facing negotiations with both a new president and government in Jakarta.