According to documents leaked by US whistleblower Edward Snowden and obtained by the ABC news and Guardian Australia, the country's intelligence attempted to tap into Yudhoyono's phone conversations at least on one occasion.
It was found through the documents the spy agencies also tracked activity on his mobile phone for 15 days in August 2009. The latest disclosure has come after previous claims that the Australian embassy in Jakarta was involved in spying on Indonesia.
Foreign Minister Marty Natalegawa said the envoy was being called back to Jakarta for "consultations" after secret documents leaked by Snowden named the President as well as his wife and senior ministers as targets of the surveillance.
"This is not a clever thing to do, it's not a smart thing to do," Natalegawa said. "It violates every single decent and legal instrument that I can think of."
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He said the onus was now on Australia to explain what happened and to make a commitment that it would never happen again.
ABC said that the documents were sourced from Australia's electronic intelligence agency, Defence Signals Directorate (now called the Australian Signals Directorate).
The DSD motto stamped on the bottom of each page reads: "Reveal their secrets - protect our own," ABC said, adding the documents show that Australian intelligence agencies actively sought a long-term strategy to continue to monitor the President's mobile phone activity.
The surveillance targets also included senior figures in his inner circle and even the President's wife Kristiani Herawati (also known as Ani Yudhoyono).