Australian PM John Howard has written to the Indonesian president to protest against the release of radical Muslim cleric Abu Bakar Ba'asyir.
Australia wants Indonesia to monitor the cleric closely
Ba'asyir, who was convicted over the 2002 Bali bombings, was released from a Jakarta prison on Wednesday after serving 26 months.
Security experts say the cleric is a founding member of regional Islamic militant group Jemaah Islamiah.
Australia has called on the Indonesian government to monitor Ba'asyir closely.
"I write to convey my very deep personal concerns and the distress of the Australian people at the release of Mr Abu Bakar Ba'asyir," Mr Howard wrote in a letter to his Indonesian counterpart, Susilo Bambang Yudhoyono.
"His release and the inflammatory statements that he has made in support of extremism since he has been released have been deeply offensive," he told parliament.
Eighty-eight of the 202 victims of the 2002 bombings on the holiday island of Bali were Australian.
Late on Wednesday, Ba'asyir returned to the Islamic school he found near Solo, south of Jakarta.
Ba'asyir addressed students at the school he founded
There he addressed a crowd of students and supporters who were waiting for him, calling on them to adhere "100%" to Islam.
He is also reported to have described JI militants as misguided.
"I believe their (militants) moves were wrong because they used bombs in a safe zone. In a peaceful area, they should just preach," Reuters news agency quoted him as saying.
"However, they are fighters whose intention is defending Islam which has been assailed by the US and its allies who fight against Islam everywhere."
Ba'asyir also confirmed his reputation for anti-American rhetoric, telling a local TV channel: "If [people] attack Islam, like the United States and its lackeys have done, they have clearly attacked Islam, so we have an obligation to hate them. Thank God. That is God's blessing. As Muslims, we hate the United States because of God. The United States hates us because of emotion."
Earlier, Australia called on the UN food agency to cancel a contract with an organisation linked to Ba'asyir to deliver earthquake aid, calling it "completely unacceptable".
The World Food Programme had entered a two-month contract with the Indonesian Mujahedin Council (MMI) to deliver 95 tons of food to victims of the earthquake near Yogyakarta. Ba'asyir chairs the council.
A spokesman said that the agency had made a mistake and had cancelled the contract, the AFP news agency reported. "When we signed the contract with them, it wasn't realised, the connection to Abu Bakar Ba'asyir."