Australian Prime Minister Tony Abbott has rejected Indonesia's calls to apologise for Australia's spying activities and has called for "cool heads" to prevail in the current diplomatic row.
Documents revealed on Monday by the ABC and Guardian Australia show that Australia intelligence attempted to intercept President Susilo Bambang Yudhoyono's telephone on at least one occasion and monitored his calls for 15 days in 2009.
Jakarta has withdrawn its ambassador and demanded that Canberra come clean on the electronic surveillance programme.
In Parliament on Tuesday, Mr Abbott repeated his assertion that "every government gathers information". He said Australia should not be expected to apologise for the "steps we take to protect our country", the ABC reports.
While he did not apologise, Mr Abbott expressed "sincere regret" over the attempt to listen in to the Indonesian president's phone conversations. Mr Abbott said Australia had deep respect for Indonesia and its people.
In his first public comments on the scandal, Mr Yudhoyono singled out Mr Abbot's comment that all governments gather information, reports the ABC.
"The actions of US and Australia has very much wounded the strategic partnership with Indonesia, a fellow democratic state," Mr Yudhoyono tweeted.
"I also regret the statement by the Australian PM that belittles this surveillance to Indonesia, as if no wrong has been done."
Mr Yudhoyono said Indonesia was reviewing its co-operation with Australia and is giving it two days to explain.