Mr Keating said both the Rudd and Gillard governments had made the same mistakes as the former Howard government in weakening Australia's crucial relationships in Asia, particularly with Indonesia.

As a result, he said, Australia had been marginalised in regional diplomacy and the era had passed in which the country was an effective foreign policy activist.

''Our sense of independence has flagged, and as it flagged we have rolled back into an easy accommodation with the foreign policy objectives of the United States,'' he said, delivering the Keith Murdoch Oration at the State Library of Victoria on Wednesday night. ''More latterly, our respect for the foreign policy objectives of the United States has superimposed itself on what should otherwise be the foreign policy objectives of Australia.''

Mr Keating said Australia had been ''traded down in the big stroke business'' since it played a key role in diplomatic initiatives such as the creation of the Asia-Pacific Economic Co-operation forum.

''Even states like Indonesia are dubious of us because they do not see us making our way in the world or their world other than in a manner deferential to other powers, especially the United States,'' he said.

Mr Keating said the problem became apparent during John Howard's prime ministership and had remained apparent under the leadership of Kevin Rudd and Julia Gillard.

''After playing the deputy sheriff, John Howard had us dancing to the tune of the United States in Iraq and Afghanistan,'' he said.

The WikiLeaks cables then revealed to the Chinese that prime minister Rudd ''had been advising the United States to reserve the military option against them''.

Under the Gillard government, the US President, Barack Obama, had ''made an oral and policy assault on China and its polity from the lower chamber of our Parliament House''.

Mr Keating called for a return to the priority given to Australia's relationship with Indonesia during his prime ministership in the early 1990s. ''No country is more important to us,'' he said.

He said he had been right in assuming former president Suharto had a generally benign view of Australia, despite ''the preoccupation of the Australian media'' with the killing of Australian journalists at Balibo in East Timor in the 1970s.

''I was completely determined to establish a totally new and durable basis for our relationship with Indonesia other than the one we had which saw everything through the prism of East Timor,'' he said.

In recent years the relationship with countries such as Indonesia and Malaysia has focused on ''transactional issues of marginal long-term significance'' such as refugees and live cattle exports.

''Policy towards our nearest, largest neighbour, Indonesia, has languished, lacking framework, judgments of magnitude and coherence,'' he said.

There should be positive discrimination in Australia's relationship with Indonesia to reduce the country's ambivalance towards us.

''Whichever way we cut it, Australia must lay a bigger bet in its relationship with Indonesia. And this has to be cultural and commercial as well as political,'' Mr Keating said.