"He's a big fish, a cunning smuggler," he said.

"From the information shared by the Australian police, we gathered that he had sent boatloads of illegal Afghan and Iranian immigrants to Australia such as Christmas Island and Ashmore."

The man was arrested at an apartment in Central Jakarta on Tuesday evening and found with about six mobile phones and several credit cards.

"We believe he's an Australian citizen as he had asked to see Australian embassy officials when he was arrested. We're now going to his house in Puncak area to get his passport," Santoso said.

Three Indonesian men faced an Australian court Tuesday on people-smuggling offences related to the December 15 shipwreck.

They were charged over smuggling a group of Iranian, Iraqi and Kurdish passengers from Indonesia to the remote Indian Ocean outpost of Christmas Island.

The men were on board the wooden fishing vessel which foundered in rough weather on December 15, forcing all on board -- believed to number about 90 -- into the sea.

Rescuers managed to pull 41 people from the water, including some with injuries from being pounded by floating debris, while one man managed to make it the short distance from the boat to shore unaided.

Authorities eventually recovered 30 bodies from the water but it is believed around 20 more have not been found.

The charges come two days after Australian customs released a report into the tragedy which said that authorities had not spotted the boat until it was about 600 metres (yards) from Christmas Island, just an hour before it crashed.

Indonesia has been a key staging point for people smugglers taking migrants on the perilous sea journey south to Australia.

Eighty-four illegal immigrants from Iran, Iraq and Afghanistan and several crew members were stranded at the coast of Kupang in East Nusa Tenggara province on Tuesday.

The immigrants were trying to head to Australia but their boat was hit by huge waves, according to the local police.