Foreign Affairs Minister Julie Bishop is due to sign an agreement in Indonesia today that aims to restore full diplomatic relations between the countries.

Ms Bishop will travel to Bali to meet Indonesian foreign minister Marty Natalegawa and president Susilo Bambang Yudhoyono to sign what she calls a "joint understanding".

Mr Natalegawa and Ms Bishop have been in negotiations on the new code of conduct for months.

The document is to be an addition to the existing Lombok Treaty - which commits both countries to cooperation and consultation, and respecting sovereignty - and includes further provisions about the use of intelligence gathering and sharing.

Relations with Indonesia became strained in November last year, after the ABC and Guardian Australia revealed Australia had spied on Mr Yudhoyono, his wife and his inner circle in 2009.

Mr Yudhoyono recalled the ambassador from Canberra, suspended joint military exercises, intelligence sharing and efforts to prevent people smuggling, until a "code of conduct" is agreed.

He stipulated they could resume if Australia agreed to a set of behaviour principles.

This resumption of cooperation comes just two months before Indonesia swears in a new, and more nationalist, president in Joko Widodo.

The signing of the agreement is expected to allow a return to normal relations.