SYDNEY (AFP) - Australia's new prime minister Kevin Rudd said on Friday the conservative opposition's proposal to turn back asylum-seeker boats risked inciting conflict with Indonesia, signalling the sensitive policy will be a key issue in September elections.

Speaking in his first press conference since being reappointed prime minister in a party coup, Mr Rudd said he would call Indonesian President Susilo Bambang Yudhoyono later Friday about security issues.

Australia is grappling with a record influx of asylum-seekers arriving by boat, with more than 10,000 arriving in the first half of this year, many from transit hubs in Indonesia.

Opposition leader Tony Abbott, who polls currently indicate will win the election, has suggested turning back boats carrying asylum-seekers to Indonesia - a course that Jakarta has not welcomed.

"I really wonder if he is trying to risk conflict with Indonesia... there have been some pretty rough times in the relationship, I never want to see that again," Mr Rudd told reporters in Canberra.

Mr Rudd said he meant a diplomatic rather than a military conflict, but added: "I am always wary about where diplomatic conflicts go."

The former foreign minister said that if Indonesia indicated it would not support Mr Abbott's policy and it was pursued regardless, "you end up with a pretty robust diplomatic conflict and I become a little uncertain as to where that heads."

"I have had enough experience in international relations... to know one thing: you really need to have some pretty cool hands on the tiller when you're dealing with the Indonesia relationship."

Mr Rudd says he is yet to decide on whether to travel to Indonesia next week for talks with Yudhoyono which were planned before this week's sudden leadership revolt which saw him topple Julia Gillard in a manner similar to his own ousting in 2010.