Australia and Indonesia have restored full military ties less than two months after Indonesia suspended co-operation over "offensive" teaching material found at an Australian base.
Prime Minister Malcolm Turnbull made the announcement in Sydney alongside Indonesian President Joko Widodo.
Both said they were also committed to concluding a free trade deal this year.
The material allegedly ridiculed Indonesia's founding principles, known as Pancasila, and its military.
"President Widodo and I have agreed to full restoration of defence co-operation, training exchanges and activities," Mr Turnbull told a news conference.
Mr Widodo, on his first visit to Australia as head of state, said he was confident that a free trade deal would be finalised this year.
"I have conveyed to Prime Minister Turnbull some of the key issues," he said.
"First is the removal of barriers to trade, tariffs and non-tariffs for Indonesian products such as Indonesia's paper and palm oil."
Earlier this month, Indonesia's military chief said Australia had apologised over the training materials used at an army base in Perth.
Indonesia said the material included "unethical stuff" that discredited Indonesia's military.
Military co-operation between the two nations covers a number of areas, including border control and counter-terrorism.
What is Pancasila?
- The official philosophical foundation of the Indonesian state
- Consists of two Javanese words, originally from Sanskrit: "panca" meaning five and "sila" meaning principles
- The principles are: The one God system (monotheism), just and civilised humanity, the unity of Indonesia, democracy and social justice for all
- Ignoring these principles is illegal. For instance, Indonesians must hold a religion because of the first one - being an atheist is illegal in the country.