The Timor gap lies off the southern coast of East Timor, in what would be territorial waters of an independent East Timor.

Indonesia froze the agreement with Australia following a serious downturn in relations between Jakarta and Canberra over Australia's leadership of a UN-backed multinational force deployed to restore order in ravaged East Timor, Antara said.

``The supervision of the Timor gap and joint military exercise with the Australian navy, coded `New Horizon', were frozen following a worsening relationship between the two governments,'' Navy Chief Admiral Achmad Sutjipto was quoted as saying.

He made the comments as Military Chief General Wiranto called for the multinational force and Indonesian troops to jointly ensure security on the border between Eastand West Timor after a clash which killed an Indonesian policeman.

Indonesia and Australia had signed a Timor gap treaty concerning joint exploration and production of oil and gas in the Timor sea.

After East Timor overwhelmingly rejected Indonesian rule in an August 30 referendum, Jakarta said it was ready to cancel the treaty.

Leading pro-independence figures have said they would be willing to maintain its terms once East Timor becomes independent.

Last month Indonesia decided to cancel a security pact with Australia, accusing Canberra of overreacting to the East Timor crisis.

The multinational force was deployed in East Timor after an orgy of killings, looting and burning by pro-Jakarta militias, backed by elements in the Indonesian military, which followed the territory's independence vote. Thousands are believed to have been killed.