JAKARTA (REUTERS) - Indonesian President Susilo Bambang Yudhoyono said talks on Wednesday with visiting Australian leader Tony Abbott had been constructive, suggesting the two giant neighbours were closer to settling a long rift which erupted late last year.

It was Prime Minister Mr Abbott's first visit to Indonesia since often tetchy relations struck a new low in November over media revelations that Australia had spied on Mr Yudhoyono, his wife and other top Indonesian officials.

"I just had a meeting with the Australian prime minister which was productive and constructive. We discussed methods to guard and improve the partnership of our countries as we move towards a future based on respect," Mr Yudhoyono told reporters on the Indonesian island of Batam where the two met.

Ties have been further strained over the issue of asylum seekers who attempt to sail to Australia via Indonesia. Mr Abbott implemented a policy of towing back to Indonesia often leaky vessels carrying asylum seekers, which has been condemned by Jakarta.

Indonesia suspended military and police cooperation with Australia over asylum seekers. Mr Yudhoyono in December presented a six-point plan for restoring good relations, including a code of conduct on intelligence matters.

"The foreign ministers have continued to discuss the issue to propose a code of conduct in the near future so that the process of improving cooperation can be implemented well," the Indonesian president said. "What we can do to resolve the issue will bring great benefit because both nations want to continue their friendship."

Indonesia's ambassador recently returned to his post in Canberra, after having been recalled as the diplomatic rift deepened over the spying claims.

Mr Abbott is scheduled to continue on to France, Canada and the United States.