Bali bombing mastermind is dead: SBY

Indonesian President Susilo Bambang Yudhoyono says Dulmatin, the suspected mastermind of the Bali bombings, has been killed in a shootout with police at an internet cafe near Jakarta.

Dulmatin, a 39-year-old Indonesian trained by al-Qaeda in Afghanistan, was wanted for his role in the suicide bombings of two Bali nightclubs in 2002, that killed 202 people, including 88 Australians.

It was Indonesia's deadliest terrorist attack.

Dr Yudhoyono made the announcement during his speech to an official luncheon in his honour at Parliament House in Canberra on Wednesday.

"I have great news to announce to you," he said.

"After a successful police raid against a terrorist hiding out in Jakarta ... we can confirm that one of those killed was Mr Dulmatin, one of the top South-East Asian terrorists that we've been looking for."

It was initially thought Dulmatin had fled to the Philippines.

Dulmatin was one of three suspected militants killed in two co-ordinated raids in Jakarta's southwestern outskirts, the president said.

Eliminating the alleged master bomb maker of the Jemaah Islamiah militant group, a South-East Asian offshoot of al-Qaeda, will be seen as a major achievement for Indonesian security forces ahead of President Barack Obama's first visit to the country on March 20-22.

Terrorism in the region will be a major focus of talks.

It was not immediately clear if anyone is eligible for a $US10 million ($A10.95 million) reward offered by the US government for Dulmatin's capture.

Tuesday's raids were part of a police crackdown on a suspected Jemaah Islamiah cell that recently established a paramilitary training camp in the western province of Aceh.

Police said the raids were based on information from about 20 suspected militants from Aceh and Java already in custody.

Prime Minister Kevin Rudd praised the work of Indonesian security agencies, saying it had been a very professional operation, which had come on the top of other recent successful missions.

"The breakthroughs which Indonesia has made in undermining various terrorist networks have been significant," he told reporters.

Mr Rudd said Australian law enforcement and security agencies had worked in close partnership with Indonesian authorities.

"We must also be mindful of the fact that the challenge of terrorism continues into the future," he said.