The comments came as Mr Marciano entered a crisis meeting at the presidential palace to discuss the issue with President Susilo Bambang Yudhoyono and Foreign Minister Marty Natalegawa, and the returned Indonesian ambassador to Australia. Indonesia Chief State Intelligence Agency Marciano Norman speaks to journalists before a meeting with Indonesia President Susilo Bambang Yudhoyono at the Palace in Jakarta. Credit:AP "It has the potential to disturb the bilateral relationship. There should be a commitment made for the future from our intelligence partner in Australia to evaluate and to fix [the situation] together. They [have to] fix [the damage] so that in the future such sensitive things which very much affect the unitary state of Indonesia [won't happen again]. None of us is willing to be treated like that." Earlier on Wednesday Indonesia had officially "downgraded" its relationship with Australia in the wake of spying allegations, according to reports of comments made by Indonesian Foreign Minister Marty Natalegawa. ‘‘The downgrading in the level of the Indonesian-Australian relationship has been done,’’ AAP reported Dr Natalegawa as saying.

‘‘We have taken measured steps in accordance with their response and attitude.’’ Australian Prime Minister Tony Abbott and Indonesian President Susilo Bambang Yudhoyono. Credit:Getty Images Dr Natalegawa was due to appear on ABC's 7.30 program on Wednesday night but withdrew from the interview at short notice on Wednesday afternoon. Dr Natalegawa has been vocal in his criticism of Tony Abbott since the Prime Minister refused to apologise after allegations emerged that Australian spies had monitored the mobile phone calls of Indonesia's President Susilo Bambang Yudhoyono and his family. Jakarta is demanding an explanation and an official response from Mr Abbott.

Dr Natalegawa reportedly made his latest comments about the downgrading of the Australian relationship on his way into the Indonesian foreign ministry in Jakarta for a meeting with the country’s ambassador to Australia, Nadjib Kesoema. Indonesian President Susilo Bambang Yudhoyono had summoned the ambassador to the Presidential palace. ‘‘We have already adjusted various forms of co-operation,’’ Dr Natalegawa reportedly said. ‘‘We are turning off the tap by degrees.’’ The downgrade comes as the feud between Australian and Indonesia escalates with Indonesian authorities saying they are ready to end co-operation with Australia on several issues such as people smuggling.

Greens Leader Christine Milne said this was ''a test of Tony Abbott’s leadership'' and he should personally call the Indonesian President. ''Tony Abbott should pick up the phone to President Yudhoyono and have a personal discussion. We’re now looking at a serious escalation where Indonesia may look at withdrawing co-operation on policing and a whole range of measures and that would be a tragedy for Australia.'' She said Australia was an Asian nation and Indonesia a very important country to us. She called on Mr Abbott to stop ''chest-beating'' and show that ''he’s capable of leading this nation and not just playing political games for his own benefit here in Australia but to the long-term detriment of the country''. Hikmahanto Juwana, Professor of International Law at the University of Indonesia, repeated on Wednesday morning his calls for Australian diplomats in Indonesia to be expelled. President Yudhoyono is under pressure from hardliners in his own governing coalition, and also from the public, to expel Australian diplomats over the spying issue.

However, expelling the ambassador would be an extremely serious diplomatic step which the cautious president is unlikely to take. Foreign minister Marty Natalegawa has suggested that removing some officers from the Australian embassy is an option on the table. Loading He has said he would consider how many people in the Australian embassy are involved in defence, intelligence and police work compared to the number in Indonesia's embassy in Canberra, and seek "reciprocity" in the numbers.