The allocation for the July to September quarter is just 50,000, which is significantly less than the 200,000 permits that were expected and the 250,000 for the quarter just gone.

Australian Livestock Exporters' Council chief executive Alison Penfold described the news as a "disappointment" and a "surprise".

She told ABC 24 on Tuesday that the reasons for the decision, which was made late last week, had not yet been made clear.

But she said they would be due to trade and food security - and not any other issues going on with the Australia-Indonesia relationship.

"It certainly will present some challenges, particularly around shipping for the industry but we've been trading with Indonesia now for over 30 years," she said of the decision.

"We have had our ups and downs but we will continue to work constructively with our customers and within the parameters that are set for the trade."

A spokesman for Agriculture Minister Barnaby Joyce said the government would continue to "make representations on behalf of exporters to ensure this important trade relationship is maintained".

He is expected to address the media from Perth later on Tuesday.

Mr Shorten told reporters that he was "most concerned" about what was happening to cattle exports.

"This is a grave concern."

When pressed about the reasons behind the dramatic cut in permits, he said: "I sincerely hope that our relationship with Indonesia at the political level is not driving this reduction."

The opposition's agriculture spokesman Joel Fitzgibbon argued the relationship was certainly a factor.

"Of course the Abbott government's relationship with Indonesia or the deterioration of it won't be helping at all," he told the ABC.

In a statement, he also said, "there's no doubt Australia's relationship with Indonesia has deteriorated under Tony Abbott".

Labor also pointed to Mr Joyce's split with cabinet over the government's approval of an Shenhua coal mine in his electorate.

"The situation in Indonesia is a shocking development but should not have been entirely unexpected if Minister Joyce was across his brief and not distracted by his internal wars with cabinet," Mr Fitzgibbon said.

Volatile relationship

Treasurer Joe Hockey dismissed any connection between the bilateral relationship and the permits decision.

"I don't think there's any relationship at all," he said, adding there had been "volatility" in the past regarding cattle exports.

He said that Mr Joyce was hoping to speak to the Indonesian government "as soon as possible, to get some greater clarity about it".

The former Labor government faced a diplomatic storm over cattle of its own, when it banned live exports to Indonesia in 2011.

It suddenly stopped exports after footage emerged of animal cruelty in Indonesia, sparking outrage from both the Australian cattle industry and Australia's neighbour.

Victorian Liberal MP Dan Tehan described the number of permits "disappointing" and said it showed the need to try and negotiate longer periods for the permits to last.

"It's very hard for both Indonesians and Australians to plan for the long-term," he told Fairfax Media.

Mr Tehan, whose electorate of Wannon produces cattle for export, said that permits should be arranged for at least six to 12 months.

But he dismissed the suggestion that diplomatic tensions were to blame for the cut in this quarter, saying there was "no indication that this has anything to do with the bilateral relationship".

He added he had "no doubt" that demand for Australian beef would continue in Indonesia.

The cattle permit change comes just weeks after former Indonesian foreign minister Marty Natalegawa said relations between Australia and Indonesia appeared to be at their lowest point.

Australia's Ambassador to Indonesia, Paul Grigson, has only recently resumed his post in Jakarta. He was briefly recalled after Bali nine ringleaders Andrew Chan and Myuran Sukumaran were executed.

Relations between Indonesia and Australia have also been tested over the past 18 months by allegations that Australian spies tapped former president Susilo Bambang Yudhoyono's phone during Labor's time in office, as well as the Abbott government's asylum seeker boat turnbacks policy.

Independent senator Nick Xenophon told Fairfax Radio that there was a lot of tension in the Australia-Indonesia relationship.

He noted that on a recent trip to Indonesia, he found that government, religious and civil society groups had been offended by Mr Abbott's comment - at the height of the Bali nine crisis - reminding Indonesia of the aid provided by Australia after the Boxing Day tsunami in 2004.

"That really got their backs up, very badly."

Follow us on Twitter