The diplomatic fallout from continuing disclosures about America's vast global spy network has begun descending on Australia after revelations that its foreign embassies are being used to intercept sensitive communications.

Indonesia yesterday summoned Australia's ambassador in Jakarta, Greg Moriarty, to explain reports on intelligence eavesdropping that it described as "unacceptable".

"The actions that were carried out, as they were reported, absolutely do not reflect the spirit of friendship that has been well maintained between neighbouring and friendly countries, and are a serious breach of security that is unacceptable to the Indonesian Government," an official statement said.

Australia's use of diplomatic posts for electronic snooping adds to a growing awareness of the United States-led Five Eyes agreement, under which it swaps intercepted data with the United States, New Zealand, Britain and Canada.


At least some of this information is passed to other countries, including Singapore and South Korea, under a "Five Eyes Plus" arrangement.

Australia and the US are also further boosting intelligence co-operation with Japan.

The revelations about the use of diplomatic posts followed the publication of documents leaked to the German weekly Der Spiegel by exiled American whistleblower Edward Snowdon.

They have been confirmed by Australian intelligence experts.

They also follow the publication in the US of national security agreements opening foreign-owned cable, satellite and other communications systems to American agencies. These include Australia's Telstra.

Fairfax Media had previously reported that the Australian Signals Directorate - the nation's electronic intercept agency - had joined its Singapore counterpart to break into undersea fibre-optic telecommunications cables linking Asia, the Middle East and Europe.

According to the Der Spiegel report and Australian experts in the local media, Australia conducts electronic spying from its embassies in Jakarta, Bangkok, Hanoi, Beijing and Dili, and high commissions in Kuala Lumpur and Port Moresby, as well as other diplomatic posts.

The intercepts are made through an operation codenamed Stateroom, based on America's XKeyscore programme, which opens an enormous database of internet communications ranging from emails to social media and online chats.

The Jakarta embassy revelations are particularly sensitive because of Indonesia's often-fragile relationship with Australia and Canberra's efforts to increase co-operation in intelligence on terrorism and people-smuggling.

Australia has been spying on Indonesian communications since the 1950s, mainly through the Shoal Bay Receiving Station near Darwin.

Other targets include such neighbours as Malaysia. In the early 1990s, Australian intelligence also bugged the new Chinese embassy in Canberra as it was being built.

Much of the information is shared with the Five Eyes partners under agreements evolving from joint Australia-US interceptions of Japanese radio signals in World War II and accelerating through the Cold War to the Echelon programme.

This was vastly upgraded as new technology and the internet changed global communications, becoming the Prism network exposed by Snowdon. The Five Eyes agreement has developed in tandem.

The heads of the Australian Signals Directorate, Office of National Assessments, and Defence Intelligence Organisation meet their New Zealand, American, British and Canadian counterparts regularly to review operations and plan action.

Defence intelligence agencies also communicate through a top secret communications system nicknamed Stoneghost, and host liaison officers from partner countries.

Australia also has a long history of direct, deep intelligence co-operation with the US including covert action. In the early 1970s, its Secret Intelligence Service played a major role in the CIA-orchestrated overthrow of Chile's socialist Government by the brutal military dictatorship of Augusto Pinochet.

The 2001 terror bombings and the friendship between former US President George W. Bush and the Australian Prime Minister of the day, John Howard, tightened the links. In 2004, Bush signed a directive elevating Australia to Intelligence Partner, the highest level of foreign access.

Recent developments include a partnership to share geospatial intelligence collected by satellites and monitored at the defence satellite communications ground station at Kojarena near Geraldton, north of Perth.

The US has also locked Australia's Telstra into a national security agreement requiring its subsidiary Reach, started as a joint venture with Hong Kong's Pacific Century Cyberworks, to set up a US-based and staffed facility opening its database to American analysts.

Reach is Asia's largest intercontinental telecoms carrier, with 82,300km of undersea cable linking Australia with New Zealand, China, Japan, Fiji and the US.

The agreement requires the company to establish "a facility ... physically located in the United States, from which electronic surveillance can be conducted pursuant to lawful US process".

A similar agreement was signed with Britain's SatCom Distribution Ltd, which operates the global Inmarsat satellite network, which covers most of the Asia-Pacific region, including New Zealand, Australia, Japan and China.

Inmarsat's four tracking stations in Italy, China and Canada are supported by a backup station in Auckland.