Foreign Minister Marise Payne has spoken to her Indonesian counterpart about an apparent decision to redevelop the Bali site where 202 people were killed in a bombing.
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Prime Minister Scott Morrison also said consul-general Helen Studdert was working "very hard" to address the situation.
"For the 88 Australians and their families, for whom this is rightly ... a very sacred place, I am deeply disturbed, deeply disturbed by the decision that would see an entertainment complex put on that site," he told reporters in Gladstone on Friday.
"They (Indonesia) can make their own decisions but we will continue to make our representations about that issue.
"We've got to remember there were many Indonesians killed that night and many people from many other countries that were killed that night as well."
Australia has provided support and funding to put a peace park at the site, he added.
Local Bali authorities have granted a permit for a five-storey restaurant and monument on the site of the Sari Club, where 88 Australians were among those killed in a car bomb attack in 2002, the ABC reported.
The move has upset survivors of the attack, who have been working for years to turn the land into a peace park.
Survivors told the ABC they had been given reassurances the site would never be used for commercial purposes.
Australian Associated Press
