The agreement covers a raft of exchange programs and an increased number of internationals between the two countries, FFA said.
Under the five-year agreement FFA will assist the PSSI in the development of coaches, players, referees, grassroots football and women’s football and host training visits for Indonesian players, coaches and officials, a statement said.
As a key part of the agreement the PSSI will assist the FFA to fully integrate into South East Asian football and the ASEAN Football Federation and provide competition for Australian teams at a range of age levels and formats.
FFA and PSSI have also agreed to encourage their respective national governments to consider football as a way to increase cooperation at political, social, economic and environmental levels, the statement said.
The memorandum was signed by FFA Chairman Frank Lowy and PSSI President Nurdin Halid.
"This is a landmark agreement with one of our closest neighbours that will see the game in both countries benefit enormously by the sharing of technical knowledge and experience," Lowy said.
"We also believe that football and our federations can be important vehicles to assist in the development of relations between our two countries and their governments."
Halid said in the statement that the agreement would be a major boost for the game in both countries and relations at all levels.
"We enjoy a close relationship with Australia and we are proud to be involved in this agreement which will bring us even closer together," Halid said.
Australia will host Indonesia in a crucial AFC Asian Cup 2011 qualification match in Brisbane on March 3. - JG.