Indonesia is to review its policy of reducing prison sentences to mark national holidays, Australian Prime Minister John Howard has said.
Abu Bakar Ba'asyir had his sentence cut by 135 days
His comments come a day after 18 people convicted in relation to the 2002 Bali bombings had their sentences cut to commemorate independence day.
The move has caused outrage in Australia, home to many Bali victims.
The Indonesian government has not commented on the reported policy review.
Thousands of prisoners in Indonesia traditionally have their sentences reduced for special national and religious holidays.
This year, 2,000 prisoners are reported to have had their sentences cut to mark the 60th anniversary of Indonesia's independence.
One of those whose sentence was reduced was the controversial Muslim cleric Abu Bakar Ba'asyir.
He was found guilty in March of conspiracy in the Bali attacks, which killed 202 people.
Many people also believe Ba'asyir is the spiritual head of the militant group Jemaah Islamiah, which has been blamed for the Bali bombings as well as other militant attacks.
Mr Howard told parliament on Thursday: "All Australians are outraged that [Ba'asyir's] sentence has been reduced. I find it offensive and I think millions of Australians will find it offensive."
Before the anniversary, Australia had asked Indonesia to prevent any of those involved in the bombings from getting sentence reductions.
But under current Indonesian law, the remissions are automatic due to a 1999 presidential decree.
"I also understand that as a result of this issue, the status of that presidential decree is now being reviewed," Mr Howard is quoted as telling ABC news.
"But that review will not have any impact on remissions that have occurred automatically under that decree," he added.
Not all the convicted Bali conspirators had their sentences reduced.
At lest five men convicted of direct involvement in the attacks are not eligible for remissions because three have been sentenced to death and the remainder have been sentenced to life in prison.