Julia Gillard will attempt to assuage Indonesian fears about the basing of US marines in Australia when President Susilo Bambang Yudhoyono makes a historic visit to Darwin this week.
The Prime Minister will also look to repair ties between Canberra and Jakarta in the wake of last year's ban on live cattle exports that infuriated Indonesians and crippled trade.
But while the two leaders had planned to focus primarily on these two issues, Ms Gillard will be forced to raise the issue of asylum seekers, following the arrival of a record number last month.
Ms Gillard and the President will hold meetings over the next two days, with Dr Yudhoyono expected in Darwin this afternoon.
Although both nations insist relations are strong, Indonesian officials expressed uneasiness last year after US President Barack Obama announced marines would be based in the Northern Territory.
And failure by the Government and Federal Opposition to find a compromise on offshore processing last week has meant Australia is even more reliant on Indonesian authorities disrupting people smuggling activities in fishing villages.
Senior Australian bureaucrats are also concerned at Indonesia's inability to play a role in search and rescue operations when asylum boats get into trouble. In the two disasters last week that claimed almost 100 lives, Indonesia was unable to assist.
Another asylum-seeker boat carrying 53 people was intercepted yesterday west of Christmas Island by HMAS Leeuwin.
Authorities are scrambling to upgrade quarantine facilities at the remote Cocos Islands, confirming fears that people smugglers from Sri Lanka and southern India have chosen the island group as a new frontier in the asylum-seeker trade.
Stretchers, washing machines, dryers, antiseptic and other supplies have been flown to Cocos.The Cocos Islands population of about 600 is furious at losing access to its only social club whenever an asylum-seeker boat arrives. A quarantine facility is to be established at an old station used in the past to house imported animals.