Rudd has held bilateral talks with his Indonesian counterpart Susilo Bambang Yudhoyono in Bali, on the sidelines of a democracy forum the two men are co-charing.

Among the plethora of issues discussed was a facility for a stand-by loan if needed by Indonesia.

Indonesia is also seeking potential assistance from Japan, the European Union, the Asia Development Bank and the World Bank.

"The scope ... of our proposed participation is in the vicinity of $1 billion," Rudd told reporters in Bali.

"Australia will of course act as a friend and good neighbour of Indonesia as we have done in the past, a decade ago, providing a financial facility of around $1 billion in a different financial crisis.

"This is the sort of thing good friends and good neighbours should do to help one another in times of global financial crisis."

Indonesia's president thanked Australia for its support.

"The ... thanks is for the provision of a stand-by loan for Indonesia if needed in case, or if the financial situation in Indonesia requires it," Yudhoyono said.

Rudd also announced $A3 million towards a new Institute for Peace and Democracy in Bali, which is aimed at fostering democracy in the Asia Pacific.

The new institute works alongside the Bali Democracy Forum, and will organise workshops and research on democratic processes.