INDONESIA has boosted its military presence near Australia and ramped up moves to increase the firepower of its armed forces, according to a report.

It comes at a time of growing turmoil in Australia's relationship with our northern neighbour after revelations last week Australian Navy vessels breached Indonesia's territorial waters while enforcing the Coalition's asylum seeker policy.

As The Jakarta Post reports, Indonesia has deployed "a number" of navy vessels to patrol its coast after the Australian incursion last week. The nation's Air Force has also programmed four radars to monitor the country's southern border.

Indonesia is reportedly awaiting the delivery of 30 F-16 fighters, a dozen Apache attack helicopters and 103 Leopard battle tanks from the US and Germany, and is purchasing a dozen Russian submarines armed with cruise missiles. Indonesia has also expanded its Marine Corps.

The Post also quoted an anonymous official who said a clash at sea could be "imminent".

"Now that we have three frigates on the border, a clash could be imminent as our Navy will prevent the towing back," the official said.

One expert told news.com.au the military upgrade was a response to fears about Australia, which is "front and centre" in the country's mind at the moment, as well as concerns about other neighbours and growing powers such as India and China.

Professor Damien Kingsbury from Deakin University said: "Indonesia has always been pensive about its territorial integrity and Australia has played a role in that in the past."

"There's a sensitivity about that. If Indonesia did that to Australia we'd be very upset, if not more so," he said.

The Australian Government apologised to Indonesia after Navy vessels "inadvertently" breached Indonesia's territory "on several occasions" in recent weeks.

Australia's relationship with Indonesia has hit rocky waters recently, particularly because of the government's 'turn back the boats' policy and allegations from US intelligence whistleblower Edward Snowden that Australia spied on the country's president, Susilo Bambang Yudhoyono, and his wife, Ani in 2009.

Prof Kingsbury said the Government had handled the spying issue "very poorly". "We needed to apologise and we needed to do it quickly and we didn't," he told news.com.au.

At a media interview at the weekend, Foreign Affairs Minister Julie Bishop said she works very closely with her Indonesian equivalent, Dr Marty Natalegawa.

"We're in regular communication, we are working together for the shared purpose of ensuring the people smuggling trade is dismantled but also that the Australia-Indonesia relationship is strengthened."

Opposition Leader Bill Shorten said at a press conference this afternoon that Tony Abbott's policies were causing tension with Indonesia.

"Our relationship with Indonesia is important. Clearly Abbott policies are causing real friction with Indonesia."