Google has announced it will begin testing balloon-powered internet over Indonesia in 2016, aiming to provide coverage across more than 17,000 islands.

According to the company, only about one in three of the country's 250 million residents has internet access, and setting up and maintaining mobile towers across the archipelago has proven to be challenging.

The solution, according to Google, is Project Loon — set up in 2013 as a series of balloons that float in the stratosphere, about 20 kilometres above Earth's surface.

The project works by ground stations connecting to the local internet infrastructure and beaming signals to the balloons, which are self-powered by solar panels.

The balloons — which once in the stratosphere will be twice as high as commercial airliners and barely visible to the naked eye — are then able to communicate with each other, forming a mesh network in the sky.

Users below have internet antennae they attach to the side of their house which can send and receive data signals from the balloons passing overhead.

"Soon we hope many more millions of people in Indonesia will be able to use the full Internet to bring their culture and businesses online and explore the world even without leaving home," Project Loon vice president Mike Cassidy said.

"Over the next few years, we're hoping Loon can partner with local providers to put high-speed LTE Internet connections within reach of more than 100 million currently unconnected people — that's enough speed to read websites, watch videos, or make purchases.

"From Sabang all the way to Merauke, many of these people live in areas without any existing Internet infrastructure, so we hope balloon-powered Internet could someday help give them access to the information and opportunity of the web."

The company has previously tested the concept in New Zealand, the United States and Brazil, but the Indonesia test will prove to be the project's biggest challenge.