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Australia boosts aid to $800m

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Susilo Bambang Yudhoyono
John Howard

JAKARTA, Indonesia (CNN) -- Australian Prime Minister John Howard has said his country would donate an additional billion Australian dollars ($764.5 million) to a partnership with Indonesia for rehabilitation in the wake of the tsunami disaster.

The aid package announced on Wednesday -- the largest single pledge so far -- will be made up of $A500 million in grants and $A500 million in concessional loans.

The money is in addition to the $A60 million ($45.5 million) already pledged by Australia to help tsunami victims.

Germany is the second biggest donor, pledging $680 million, with Japan at third with $500 million. (Contributions by country)

The grants will be used for short term restoration projects such as rebuilding schools and the loans for longer term development projects, Howard told media in Jakarta.

"It is a program of long-term, sustained cooperation and capacity building," Howard said.

The Australian leader is in Indonesia for Thursday's regional summit on the catastrophe.

The money would be distributed over five years, Howard said, and would add to Australia's existing development program with Indonesia, which already includes $A800 million ($611.6 million) over five years.

"While there will naturally be a clear focus on the areas devastated by the tsunami, all areas of Indonesia will be eligible for assistance under the partnership," the prime minister said.

Howard said the aid package would place relations between Australia and Indonesia on "an even firmer footing".

He said Indonesian President Susilo Bambang Yudhoyono had been "overwhelmed" by Australia's generosity.

The package was probably the largest single aid project in Australia's history, Howard said.

The sometimes rocky relationship between Australia and Indonesia has been steadily improving since hitting a nadir in 1999 when Australia led an international peacekeeping task force into the then Indonesian territory of East Timor.

Cooperation between the two nations has been spurred by joint security efforts to fight regional terrorism in the wake of the 2002 Bali bombings and subsequent attacks in Jakarta, including last year's bombing of the Australian embassy in Jakarta.

CNN's Grant Holloway in Sydney contributed to this story.

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