Prime Minister Scott Morrison has sent his condolences to Indonesia after a submarine with 53 sailors on board was finally found.
Australia took part in a desperate international search including the United States, Singapore, Malaysia, and India for the vessel, which involved dozens of helicopters and ships equipped with sonar systems. Australian warship HMAS Ballarat had taken part in the search.
Prime Minister Scott Morrison contacted Indonesian President Joko Widodo on Sunday night after the vessel was found in three pieces at the bottom of the Bali sea, hundreds of metres beyond its diving range.
All of its crew have died, including Indonesia's submarine fleet commander, Harry Setiawan.
Mr Morrison said on Sunday night:
"Deepest sympathies to President Jokowi and all our Indonesian friends on the loss of KRI Nanggala."
"A tragic reminder of the ultimate sacrifice our service people make for their country. It was an honour to contribute to search efforts. Australia stands by you in your time of loss."
The loss of the 44-year-old vessel has renewed calls for Indonesia to modernise its ageing military hardware.
The submarine went missing last week while conducting a torpedo drill.
It lost contact after being granted clearance to dive and plunged well below its self-operating levels.
The submarine was found in at least three parts, deep in the Bali Sea, army and navy officials say.
Search teams said on Saturday they had found objects including prayer mat fragments and a bottle of periscope lubricant near the submarine's last known location, leading the navy to believe the vessel had cracked.
Rescuers had previously found objects, including a life vest, that they believe belong to those aboard the 44-year old KRI Nanggala-402. Military chief Hadi Tjahjanto said on the weekend that the presence of an oil slick, as well as the discovery of the debris, were clear proof the vessel has sunk.
Residents of the East Java town of Banyuwangi, which hosts the naval base from where search and rescue operations are being conducted, joined nationwide calls to accelerate the modernisation of Indonesia's defence forces. 29-year-old resident Hein Ferdy Sentoso said:
"This can be a learning point for the government to advance its military technology and be careful in how it uses its (existing) technology because its people's lives are at stake."
Southeast Asia's most populous country has sought to revamp its military capability, yet some equipment is still old and there have been fatal accidents in recent years.
Indonesia had five submarines before the latest accident; two German-built Type 209s including Nanggala and three newer South Korean vessels.
The German-built diesel-powered KRI Nanggala 402 has been in service in Indonesia since 1981 and was carrying 49 crew members and three gunners as well as its commander, the Indonesian defence ministry said.
Indonesia has faced growing challenges to its maritime claims in recent years, including numerous incidents involving Chinese vessels near the Natuna Islands.
-- with AAP