Visiting Australian Prime Minister John Howard has told Indonesia's president Megawati Sukarnoputri that Australia respects Indonesia's territorial integrity. Mr. Howard's three-day visit, aimed at improving relations, has begun with a snub from Indonesia's parliament.

The speakers of the lower and upper house, Akbar Tandjung and Amien Rais, have said they refuse to meet with the Australian Prime Minister to protest what they say is Australia's financial support for an independence movement in Indonesia's separatist province of Papua. Mr. Howard called the allegation "categorically untrue."

This is the Australian prime minister's second visit to Indonesia in six months. President Megawati has said she told Mr. Howard that in order to make them more stable, relations between the two countries should be based on realism and rationalism. She expressed confidence in improved future ties.

In an apparent attempt at fence-mending, Mr. Howard was careful to show support for Indonesian unity, in a speech after his meeting with Mrs. Megawati.

"I told the president that Australia strongly supported the territorial integrity and the unity of the Indonesian nation. We understand the challenges of a vast nation. We respect very much the autonomy packages that have been developed to deal with particular regional issues, but Australia supports the maintenance of the unity of the Indonesian nation and it is a very significant element of the bi-lateral understanding between our two governments and our two countries," he said.

Indonesia's Foreign Minister, Hassan Wirayuda, has played down the snub to Mr. Howard by the country's legislative leaders, calling it an example of democracy in action.

"That's the reality of democracy. Each group, even among state agencies, like in this case the parliament, has their own views on the visit of the Prime Minister," he said.

Another source of friction between the two countries has been people smuggling gangs that use Indonesia as a transit point to Australia. The two nations are hosting an international conference on the matter in Bali at the end of the month and Mr. Howard said that the problem must be tackled on a regional basis.

The Australian Prime Minister also said that Indonesia has proposed an agreement between the two countries to counter international terrorism. Mr. Howard said Australia welcomes the idea, and if an agreement can be worked out, he may sign a Memorandum of Understanding before leaving the country.

"This understanding, if it's reached, will send a very strong signal to other countries in the region that Indonesia and Australia are serious about this challenge," Mr. Howard said.

Indonesia and Australia have had strained relations since 1999, when Australia led an international peacekeeping force into East Timor to stop a deadly rampage by army-backed militias after the East Timorese vote for independence from Indonesia.