Indonesia and Australia will discuss when the postponed visit of President Joko Widodo can be rescheduled.
Mr Widodo deferred his trip on Saturday after a mass protest on the streets of Jakarta the previous evening turned ugly.
Prime Minister Malcolm Turnbull says he expressed Australia's regret but understood the need for Mr Widodo to remain at home for the time being during a phone call between the pair.
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A pop concert with the Indonesian community at Sydney's Olympic Park had been scheduled in anticipation of his arrival on Sunday which was expected to echo the frenzied reception for India's Prime Minister Narendra Modi two years ago.
Beyond the welcome, the president, who is known at home as Jokowi, was keen to pursue issues of trade, investment and increased maritime co-operation.
An otherwise peaceful protest in Jakarta spiralled into violence on Friday night, with up to 150,000 protesters hurling stones at police and demanding the jailing of the city's governor Basuki Tjahaja Purnama over comments he made about the Koran.
Protests
The protest against Purnama, the first ethnic Chinese to hold the position of Jakarta governor, was largely peaceful but in the evening the crowd grew restive and police restrained them with tear gas and water cannon fire.
One person died and more than 100 were injured in the violence, many of them police officers. Three vehicles were torched and 18 were damaged, national police spokesman Boy Rafli Amar told a news conference on Saturday.
Clashes broke out in a north Jakarta area where there are large communities of non-Muslims and about 15 people were arrested there for looting a minimart, Amar said.
Some Chinese-owned shops and restaurants were shuttered in northern Jakarta on Saturday, while security officers guarded a temple and a school, according to a resident.
A spokesman for the Islamic Defenders Front, a group that led the protest, denied responsibility for the violence and said the "provocateurs" were the police who fired tear gas.
The group may organise another protest if the legal process against Purnama for his Koran comments is not allowed to run its course, said Munarman, who goes by one name. "If the law is ignored ... then we will call for similar action."
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Widodo blames 'political actors'
Indonesia has the world's largest Muslim population, but most follow a moderate form of Islam and protests on such a large scale are rare.
Ethnic Chinese make up just over 1 percent of Indonesia's 250 million people, and they typically do not enter politics.
Indonesian Chinese have faced persecution and violence in the past, especially during the turmoil that gripped Jakarta when former strongman Suharto was toppled in the late 1990s.
About a dozen Muslim groups have accused Purnama of insulting Islam after he jokingly said his opponents had used a verse from the Koran to deceive voters. The verse implies that Muslims should not choose non-Muslims as leaders.
Police are investigating the case against Purnama, who has apologised for his remarks, insisting he was not criticizing the Koranic verse but those who used it to attack him.
Purnama, popularly known as 'Ahok', is a no-nonsense reformer with little patience for the corruption widely blamed for the chaos and dilapidated infrastructure of an overcrowded city of 10 million.
He remains popular despite efforts by Muslim groups to vilify him and is seen as the frontrunner in the election, though many voters are angry with him for evicting thousands from slums to modernize Jakarta.
A protester waves a baton as police trucks are seen burning during a clash outside the presidential palace in Jakarta, Indonesia, Friday, Nov. 4, 2016. (AAP) Source: AAP
Widodo, a Muslim, has vowed not to interfere in any legal proceedings against Purnama, who is an ally of the president. But he told the news conference that any legal process involving Purnama would be executed "swiftly, firmly and transparently".
He criticised politicians - whom he didn't name - for inciting die-hard protesters after most had already gone home.
" ... we deplore the incident after the Isha prayers, when [demonstrators] should have already disbanded but became violent. And, we see this was steered by political actors who were exploiting the situation," he said.
A former furniture salesman who became the first president of Indonesia from outside the military or political elite, Widodo struggled in his first year to assert himself but since then he has built alliances across the political spectrum.
Analysts say that by openly supporting Purnama he could weaken his support base.
"From his perspective this visit to Australia just doesn't seem to match the urgency of this happening in Jakarta: although it's not conceivable that he might be overthrown ... it is conceivable that he could be greatly reduced in power to support the re-election of Ahok," said political analyst Wimar Witoelar.
