Australia decided to support East Timorese independence many months before a referendum in 1999, but publicly maintained the line that it should remain part of Indonesia, a report said on Saturday.
In an interview for a book about modern Australian politics, former conservative prime minister John Howard said he had believed East Timor's independence was "inevitable".
But "one had to be careful about handling that publicly," Howard told author Paul Kelly.
"You had to get the Indonesians to agree," he said, according to an extract of the book published in The Australian newspaper.
Kelly said Howard's foreign minister Alexander Downer told him in January 1999 that "there is now a very good chance East Timor will be independent by the end of this year, and we intend to go along with this."
But they kept their intentions secret from their own defence department and also from Jakarta, hoping to hold the peace, Kelly said.
"Australia's (public and military) objectives were having East Timor remain part of Indonesia, ensuring ties with Jakarta were put before the fate of East Timor, retaining Australia's military ties with Indonesia and avoiding any Australian defence force deployment if possible," said Kelly.
"While telling Indonesia that autonomy would be the best result Howard and Downer, as 1999 advanced, became willing backers of an independent East Timor," he wrote.
Kelly said Howard wrote to Indonesia's then-president B.J Habibie in late 1998 expressing his view that there were only "two realistic scenarios for the future of East Timor."
"Either full independence (and probably sooner rather than later) or some sort of free association with Indonesia achieved as the end point of a process," the letter said, according to Kelly.
This proposal of a "process" sparked what would ultimately become the UN-backed August 1999 referendum when East Timor's people voted to end a bloody 24-year occupation by Indonesia's forces, Kelly said.
Howard led diplomatic efforts ahead of the ballot, and successfully pressured the United States to join the subsequent Australian-led peacekeeping mission, Kelly wrote.
"East Timor saw Australia's acceptance in psychological, political and military terms of a stronger regional security responsibility," he said.