INDONESIA says it still expects an explanation from Australia over spying revelations, describing Prime Minister Tony Abbott's response and continued refusal to apologise over the drama as "regrettable".
As the diplomatic crisis appeared certain to escalate on Tuesday, Mr Abbott again rejected calls to apologise to Indonesia after reports Australian spies had monitored President Susilo Bambang Yudhoyono's telephone activity.
Indonesia responded on Tuesday afternoon, with a spokesman for the president insisting that Australia's response to the allegations to date had been inadequate.
"Of course this is regrettable, the president regretted the Australian prime minister's response," presidential spokesman Julian Pasha told reporters.
Indonesian Foreign Minister Marty Natalegawa later warned Australia should not underestimate the effect the spying controversy had caused, and would continue to cause, in terms of the relationship.
"Australia still needs to develop their attitude and response, because this is something that can't trivialised or underestimated (in terms of) its impact," Dr Natalegawa said at the presidential palace.
"We will evaluate day by day its development. It's not us who brought this problem, it's Australia. And so Australia is the one who must find the best solution for this."
Indonesia recalled its ambassador to Canberra following claims - stemming from the latest leak by fugitive US intelligence whistleblower Edward Snowden - Australian spies targeted the mobile phones of Dr Yudhoyono, his wife Ani and some of his closest confidants under Kevin Rudd's government in 2009.
Dr Yudhoyono warned his government would now review bilateral cooperation with Australia.
"I also regret the statement of Australian Prime Minister that belittled this tapping matter on Indonesia, without any remorse," Dr Yudhoyono said, referring to Mr Abbott's comments about the issue on Monday.
Mr Abbott has been under mounting pressure to apologise to Dr Yudhoyono to prevent a further escalation in the diplomatic crisis.
But the prime minister told parliament on Tuesday he would not do so.
"Australia should not be expected to apologise for the steps we take to protect our country now or in the past, any more than other governments should be expected to apologise for the similar steps that they have taken," he said.
Australia also shouldn't be expected to detail what its intelligence agencies do to protect its citizens, he said.
"Others should ask of us no more than they are prepared to do themselves."
Mr Abbott went on to say he respected Indonesia and Dr Yudhoyono.
"That's why I sincerely regret any embarrassment that recent media reports have caused him," he said.
"But it is in everyone's interests - Indonesia's no less than Australia's - that cool heads prevail and that our relationship grows closer, not more distant."
Opposition Leader Bill Shorten said Labor would not seek to politicise the issue but he wanted to see the relationship repaired as soon as possible.
"We should not allow these matters to fester," he said.
Indonesia's ambassador to Australia, Nadjib Kesoema, flew out of Canberra on Tuesday on the orders of his government, telling reporters before he boarded his flight that Mr Abbott owed his country a good explanation.
In Jakarta, the country's newspapers were dominated by calls for an even tougher response to the phone tapping scandal.
One of the largest selling Indonesian language newspapers, Media Indonesia, carried an editorial calling for a "harsh response to the Kangaroo Country, which has betrayed the good relationship".
"It's time to remind the world that Indonesia is not a nation to be treated (in this way)," the editorial read.
Another nationalist leaning newspaper, Republika, led its front page with the headline: "Tapping Destroys Diplomacy".
University of Indonesia international relations expert Hikmahanto Juwana said the latest spying scandal had awoken nationalist fervour in Indonesia, adding that expelling a number of officials would probably have a calming effect.
He warned the Indonesia government had to be careful not to let public anger over the issue spiral out of control.
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