Vanuatu is reported to be threatening to expel AusAID officials over allegations that they spied for Canberra.
Vanuatu's Foreign Minister, Barak Sope, has also given Australia 10 days to remove its small contingent of federal police out of the country.
The diplomatic spat comes just five weeks after Serge Vohor was elected as Vanuatu's new prime minister.
He campaigned on a platform that included cracking down on foreign influence in government and not allowing aid donor countries to impose programs on his administration.
