AUSTRALIA will withdraw its ambassador to Indonesia following the execution of Andrew Chan and Myuran Sukumaran by firing squad overnight.
Prime Minister Tony Abbott announced the unprecedented move during a press conference in Canberra on Wednesday morning.
"We respect Indonesia's sovereignty but we do deplore what's been done and this cannot be simply business as usual. For that reason, once all the courtesies have been extended to the Chan and Sukumaran families our ambassador will be withdrawn for consultations."
Australia has not withdrawn ambassadors when other Australian citizens have been subjected to the death penalty, including when convicted Australian drug smuggler Van Tuong Nguyen was executed in Singapore in 2005.
“We've got to be very careful to ensure that we do not allow our anger to make a bad situation worse”
Mr Abbott acknowledged that this is a "dark moment" in Australia's relationship with Indonesia.
"I want to stress that this is a very important relationship between Australia and Indonesia but it has suffered as a result of what's been done over the last few hours," he said.
Foreign Minister Julie Bishop said that Australia's ambassador, Paul Grigson, will return to Australia by the end of the week for consultations with the government about the future of Australia's relationship with Indonesia.
"The withdrawal of an ambassador is to register our displeasure at the way our citizens have been treated," Ms Bishop said.
Australians Andrew Chan and Myuran Sukumaran have been executed in Indonesia.
Executing the two men was "senseless" given they had rehabilitated themselves during a decade in prison, Ms Bishop said.
Mr Abbott said he understood that Australians would be angry about Indonesia's decision to proceed with the executions but urged people not to make a bad situation worse.
"I absolutely understand people's anger," Mr Abbott said.
"On the other hand, we do not want to make a difficult situation worse and the relationship between Australia and Indonesia is important, remains important, will always be important, will become more important as time goes by. So I would say to people yes, you are absolutely entitled to be angry but we've got to be very careful to ensure that we do not allow our anger to make a bad situation worse."
Ms Bishop said that Australia's aid budget to Indonesia would be dealt with separately.
“As a close friend and neighbour of Indonesia, Australia is deeply hurt that our pleas for mercy were ignored”
Earlier, Opposition Leader Bill Shorten and deputy leader Tanya Plibersek said that Indonesia's "completely unacceptable" actions had "deeply hurt" Australia and demanded a strong response from the Abbott government.
"Our best hopes have been dashed and our worst fears realised," they said in a statement.
"Labor condemns the execution of Andrew Chan and Myuran Sukumaran in the strongest possible terms."
Mr Shorten and Ms Plibersek said Chan and Sukumaran had been rehabilitated during their time in prison.
"Yet today, they were made to pay for one stupid decision of 10 years ago with their lives," they said.
"Indonesia has not just robbed two young men of their lives but robbed itself of two examples of the strengths of its justice system.
"As a close friend and neighbour of Indonesia, Australia is deeply hurt that our pleas for mercy were ignored.
"It was completely unacceptable for Indonesia to proceed as it did when critical legal processes were yet to run their course, raising serious questions about Indonesia's commitment to the rule of law.
"These executions significantly weaken Indonesia's ability to plead mercy for its own citizens facing execution around the world."
Mr Shorten and Ms Plibersek praised Australian diplomats, embassy staff and the Prime Minister and Foreign Minister for their efforts to save the men's lives.