Jakarta  - Indonesia and Australia signed on Friday a new forest carbon partnership aimed to fight climate change in the region, and the two agreed to improve bilateral ties as well as security cooperation.

"We have signed Australia-Indonesia Forest Carbon Partnership as a concrete example of cooperation between the two countries in fighting climate change in the forestry field," Indonesian President Susilo Bambang Yudhoyono told a joint press conference after he held talks with Australian Prime Minister Kevin Rudd.

Other issues discussed, include trade and investment, cooperation on education, tourism as well as defence and security, Yudhoyono said.

The two leaders also touched on the fight against Islamic militants following bomb blasts in Bali in 2002 and 2005, where many foreign tourists, the biggest number of them Australians, were killed.

"Since then, Indonesia and Australia have agreed that we cannot be defeated by terrorism. We are working together to bring the offenders to the court and then work together to prevent another terrorist attack," Yudhoyono said.

Rudd said Indonesia and Australia's future security cooperation will go from "strength to strength" against the common enemy of terrorism, adding that anti-terrorism efforts were an example of how the two countries could cooperate to face regional challenges.

Rudd praised the "very strong friendship" between the two neighbours.

"Australia and Indonesia are neighbours through geographic circumstance but we are friends through active national choice, and this is a very good friendship," Rudd said, adding that the recent natural catastrophes in Myanmar, which was devastated by a cyclone in May, and quake-hit China underscored the need for a regional disaster response mechanism.

It was Rudd's first state visit to Indonesia since he defeated conservative prime minister John Howard in elections in November.

Rudd arrived in Jakarta late Thursday for a three-day official trip. He was scheduled to fly Saturday to Aceh province, on the northern end of Sumatra, devastated by massive quake-triggered tsunami in late 2004, which left more than 177,000 people dead or missing.

The Australian prime minister however refused to give a timeframe of when Australia might lift a travel warning against visiting parts of Indonesia.

Rudd said the two leaders had discussed further security cooperation within the framework of the Lombok Treaty, a defence pact agreed between the two countries in 2006 on the Indonesian island of Lombok. He did not elaborate on details.

The treaty aims to expand security cooperation, and also gives underlining support for Jakarta's sovereignty over restive provinces, an issue that has often dogged the neighbours' relations.

Indonesia tore up a defence pact with Canberra nine years ago when Australia led an international force in East Timor to restore order after the territory voted to break from Jakarta. (dpa)