A court in Jakarta has upheld an Indonesian government ban on the Australian feature film Balibo, saying it could incite political tensions.

The film shows Indonesian Special Forces murdering five Australian-based newsmen during Indonesia's invasion of East Timor in 1975.

The account contradicts Indonesia's official explanation that they were accidentally killed in crossfire.

It drew heavily on the evidence and findings of a New South Wales coronial inquest.

But a panel of three judges in Jakarta found the film was based on subjective opinion and should not have included material that could damage relations between Australia and Indonesia.

Indonesia's Association of Independent Journalists is fighting the ban and plans to appeal the decision.