Australia and the United States mounted a joint surveillance operation on Indonesia during the 2007 United Nations climate change conference in Bali, a report said on Sunday.
The Guardian newspaper's Australian edition cited a document from US whistleblower Edward Snowden showing Australian spy agency the Defence Signals Directorate worked alongside America's National Security Agency (NSA) to collect the phone numbers of Indonesian security officials.
The revelation is likely to exacerbate already strained relations with Jakarta after reports last week that Canberra's overseas diplomatic posts were involved in a vast US-led surveillance network.
Missions in Indonesia, as well as embassies or consulates in China, were reportedly used to monitor phone calls and collect data, sparking demands for an explanation from Jakarta and Beijing.
The Guardian said the 2007 operation was not particularly successful, with the only tangible outcome being the mobile phone number of Bali's chief of police.
"The goal of the development effort was to gain a solid understanding of the network structure should collection be required in the event of an emergency," according to an account of the mission included in a 2008 weekly report from the NSA base at Pine Gap in Australia, one of the agency's biggest overseas bases.
Summing up at the end of the operation, the NSA said: "Highlights include the compromise of the mobile phone number for Bali's chief of police."
"Site efforts revealed previously unknown Indonesian communications networks and postured us to increase collection in the event of a crisis," according to The Guardian.
While largely unsuccessful, the operation is hugely embarrassing for Australia.
At the time, Kevin Rudd was the country's newly-elected Prime Minister and he attended the summit -- his first high-profile international foray -- at the personal invitation of Indonesian President Susilo Bambang Yudhoyono.
Both leaders agreed at the time to work together to advance ties.
Widespread reports of NSA spying based on leaks from fugitive intelligence analyst Snowden, including that the agency was monitoring German Chancellor Angela Merkel's phone, have already sparked a major trans-Atlantic rift.
After last week's report in the Sydney Morning Herald, which amplified earlier revelations by German magazine Der Spiegel, China's foreign ministry demanded the Australian side "make a clarification".
Jakarta summoned Australian Ambassador Greg Moriarty for an explanation on Friday while Indonesian Foreign Minister Marty Natalegawa described the reported spying activities as "just not cricket".