The Indonesian government has announced it will place a two-year moratorium on new concessions to clear natural forests and peatlands.
It has made a deal with Norway, aimed at reducing greenhouse gases.
Norway will invest $US1 billion in forest conservation projects in Indonesia under a deal struck by Indonesian president Susilo Bambang Yudhoyono and Norwegian prime minister Jens Stoltenberg in Oslo.
The suspension will encourage the development of new plantations "on degraded lands rather than vulnerable forests and peatlands", a statement said.
Previous concessions already granted to clear forest land are likely to still be honoured, since the statement only referred to new concessions, the ABC reports.