Osama bin Laden's al-Qaeda network is being firmly linked to Saturday's bomb blasts in Bali that killed 181 people and wounded 300.
Indonesian Defence Minister Mr Matori Abdul Jalil says he believes al-Qaeda was responsible and Australian Foreign Minister Mr Alexander Downer, arriving on the island today, said he had information that al-Qaeda had a role in the attack.
Indonesian police also say they have the names of individuals linked to the attack.
"We have names that would lead in some directions to solve this case. There are names which are linked who could give information," Bali police spokesman Mr Yatim Suyatmo said, declining to give any names or details.
His comments follow Mr Matori's assertion that he was "sure" the al-Qaeda network operates in Indonesia. "The explosion in Bali is related to al-Qaeda," he said. "I am convinced that there is a link between al Qaeda and domestic terrorists," he added.
Mr Downer is meeting officials and visiting the site of the attacks and the hospital where victims are being treated. When he arrived this afternoon he said: "We have some information, particularly from the Indonesians, that there are links to al-Qaeda in this terrorist attack."
The Islamic fundamentalist Jemaah Islamiah is suspected of having a role and has in the past been associated with al-Qaeda.
"We have very great concerns about organisations like Jemaah Islamiah and their activitievs in Southeast Asia, not just by the way in Indonesia," Mr Downer said. "Whether Jemaah Islamiah had any involvement in it, what links there are to al Qaeda, these are all issues which are being given very serious consideration, but there is no conclusion."
Mr Downer will also travel to Jakarta to discuss the efforts to catch the bombers as international calls for the Indonesian government to crack down on militant Islamic groups increases.
The United States, Singapore and other Asian neighbours have accused Indonesia of not doing enough as other Southeast Asia nations have rounded up scores of militants, particularly Jemaah Islamiah members.
Militant Muslim cleric Abu Bakar Bashir, who runs a religious school in central Java has been identified as a key leader. Mr Bashir, who has consistently denied links to Jemaah Islamiah or terrorism, said he had heard reports he might be arrested. He condemn the attack saying it was a "a brutal act".
Predominantly Muslim Malaysia said it would closely watch nightspots popular with Westerners and the Philippines, battling a Muslim insurgency, put its police force on a nationwide alert over fears of further attacks in the region.
The Jakarta stock market dived more than 10 per cent and the rupiah currency slumped, partly on fears that foreign investors will flee the world's fourth most populous nation.
Meanwhile distraught relatives leafed through photographs in a Bali morgue to identify loved ones killed in the explosions that devastated the Sari nightclub on Kuta Beach and nearby bars packed with holiday-makers.
A total of 13 Australians were confirmed dead and 225 were unaccounted for. A large number of Indonesians are among the dead.
Thirty-three Britons are believed to have been killed, British Foreign Secretary Jack Straw said today. He said 18 Britons were among the dead, and added that 15 Britons still missing were also believed to have been killed.
Other nationalities among and dead and more than 300 wounded were Singaporeans, Americans, Swedes, Swiss and Dutch. Many of the dead have yet to be identified.
Two Irish people were hurt in the attack and the Department of Foreign Affairs is trying to locate several other Irish citizens who were believed to be in Bali at the time.