Downer commended the advances made, noting that the work was a "very complex and difficult" task due to the sheer scale of destruction wrought by the killer waves that left some 168,000 dead in the province.

"Tremendous work has been done by the Indonesian government, non-government organisations and donors, including Australia, to rehabilitate the lives of peope here," he said.

"This is not an easy task. It's very difficult to do because the size of the destruction is very big," he told reporters during a visit to the state-run Zainoel Abidin Hospital, whose reconstruction was partly funded by Australia.

Critics have charged that reconstruction has been slow in Aceh, where only 16,500 houses out of a targetted 120,000 have been rebuilt.

Some 67,000 people remain in tents and 30,000 live in barracks in the staunchly Muslim province, with the rest of an estimated 570,000 people who were displaced staying with relatives.

Downer also inspected the rebuilding of a port in Ulee Lheue which was partly funded by Australia.

The Australian government said Wednesday it had allocated nearly all of its one billion dollars (750 million US) pledged for tsunami relief in Indonesia.

In the latest talks, Australian and Indonesian officials agreed on the allocation of 663 million dollars in loans and aid, Downer and Treasurer Peter Costello said in a statement.

Most of the latest funding however will be spent on roads and schools across the archipelago, with the overall programme aiming to help Indonesia achieve economic growth and improve emergency preparedness and response.

Indonesia was the country worst-hit by the December 26 tsunami triggered by a massive undersea earthquake off the coast of Sumatra which killed about 217,000 people around the Indian Ocean.

Downer said in Jakarta Wednesday that he met recently with the head of the Indonesian agency overseeing reconstruction, Kuntoro Mangkusubroto, and was "happy with what he told me" about rebuilding efforts.

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