The Papua New Guinea prime minister, Peter O'Neill, says he was shocked by Australia's announcement that it might open a diplomatic mission in Bougainville, where a referendum on independence is scheduled.
Mr O'Neill says there has been no consultation to open a diplomatyic post in Buka and there is no agreement to proceed.
He says he only learned about it when reading papers issued by Australia this week outlining its fiscal 2016 national budget.
However, Canberra says the proposal for such an office was discussed in December and Australia's High Commissioner to Papua New Guinea had advised the PNG government about its plans.
The PNG prime minister says there are sensitivities around areas like Bougainville with the elections there underway at the present.
He went on to say that Bougainville is an integral part of Papua New Guinea, and refused comment on whether his government would support an independence referendum for the island.
Bougainville is set to hold a referendum on possible independence from PNG before 2020 as laid down in the 2001 Peace Agreement that ended a decade-long civil war.