Indonesia has reportedly suspended military cooperation with Australia on crackdown of people smuggling amidst the spying revelations.
The announcement has put ties between the two nations in crisis, despite Indonesia admitting to similar intelligence gathering in the past without such a grave reaction from Australia.
According to the Telegraph, Indonesian President Susilo Bambang Yudhoyono expressed deep anger over claims that his phone and those of his wife and senior officials was snooped on and called the alleged spying as illegal adding that now is not the era of the Cold War.
The alleged spying was targeted by the Defence Signals Directorate weeks after three Australians were killed in terrorist bombings in Jakarta in 2009 and Australian Prime Minister Tony Abbott expressed deep regret about the claims.
Yudhoyono suspended military and border protection cooperation, including coordinated naval patrols and a planned military exercise in Darwin, and said that if Australia wants to maintain good ties with Indonesia, it must provide an official explanation.
Cooperation by Australian and Indonesian authorities in recent months had prevented thousands of asylum seekers boarding dangerous vessels, the report added.