Australia remains trapped in a growing intelligence bog as allegations of espionage against Timor Leste trigger another diplomatic spat and the nation's spy agencies brace for even more damaging revelations.

Foreign Minister Julie Bishop flew to Jakarta yesterday to help negotiate an end to the crisis with Indonesia sparked by reports that Australian agents tapped the phones of President Susilo Bambang Yudhoyono, his wife and senior colleagues.

Indonesia has severed co-operation in defence, intelligence and other areas, impacting on Australia's efforts to stop asylum seekers crossing the Indian Ocean.

Previous revelations from Edward Snowden, the American whistleblower who stole a cache of files from the US National Security Agency, have documented Australian spying in countries including Indonesia, China and Malaysia, using electronic eavesdropping stations in embassies and high commissions.


The data was fed to Five Eyes intelligence alliance partners the US, New Zealand, Britain and Canada.

Yesterday the Australian reported that more than 15,000 secret Australian files, and possibly as many as 20,000, may now be in Snowden's hands, revealing the hoovering of political, military and economic intelligence agency in the region, especially by the Australian Signals Directorate.

The directorate, formerly known as the Defence Signals Directorate, intercepts electronic communications. Australia is now trying to get some idea of what else Snowden might possess in the face of what it believes will inevitably be further damaging leaks. "It is more serious than WikiLeaks, it is more serious than [Cold War British spies Kim] Philby and [Guy] Burgess and [Donald] Maclean, because of its extent," Attorney-General George Brandis told the Australian.

In The Hague, the tribunal due to begin hearing Timor Leste's case to have a 2004 agreement on the sharing of gas reserves in the Timor Sea set aside will hear detailed allegations of spying by the Australian Secret Intelligence Service during the deal's negotiations. The allegations were publicly aired by Canberra lawyer Bernard Collaery, acting for Timor Leste, after his home and office were raided and files seized by the domestic spy agency, the Australian Security Intelligence Organisation.

A key witness, a retired ASIS officer who was in charge of all technical operations including the alleged bugging of cabinet rooms in Dili, was also detained by ASIO and his passport impounded.

The Government has defended ASIO's actions as a matter of national security, and denied it was trying to intimidate and stifle the Timorese action.

Timor Leste Prime Minister Xanana Gusmao described the raids and the detaining of the whistleblower as "counterproductive".

Fairfax newspapers reported yesterday that the whistleblower had taken his claims to the intelligence watchdog, the Inspector-General of Intelligence and Security, but had been advised to seek a lawyer if he wanted to take the matter further.

In the Australian, Paul Cleary, an adviser to Timor Leste during the negotiations, wrote that Australia had also bugged Indonesian officials during earlier negotiations on a Timor Sea oil and gas deal. Timor Leste was then part of Indonesia.

Timor Leste wants its existing 50-50 deal set aside because of the advantage Australia gained during its negotiations. Significantly, the agreement draws a maritime boundary close to the tiny nation - rather than midway that would place the reserves in Timorese waters - and bans talks on a new boundary for 50 years.

Timor claims the bugging was directed by then ASIS chief David Irvine, now head of ASIO, and authorised by then-Foreign Minister Alexander Downer. Downer later became a consultant for Woodside Petroleum, the Australian energy giant developing the joint Greater Sunrise gas field.