INDONESIA has experienced a ''sharp uptick'' in religiously motivated violence, with Islamic gangs regularly attacking Christian churches and ''deviant sects'' of their own faith, a new report has warned.

The report by Human Rights Watch warns that the Indonesian government, police and military are ''passively, and sometimes actively'' condoning the new extremists, in contrast to the way they ''wrestled to the ground'' the terrorists of Jemaah Islamiah in the past decade.

The organisation accuses Indonesian President Susilo Bambang Yudhoyono of responding ''weakly'' to the threat, with ''lofty but empty rhetoric''. ''With JI they saw a clear and present danger,'' said Human Rights Watch's deputy Asia director, Phelim Kine.

''Now, the government is failing to recognise this less spectacular but equally corrosive and dangerous strain of religious intolerance.''

Mr Kine said there were ''worrying echoes'' of Pakistan's state of siege against minority Islamic sects, and if intolerance and violence continued to increase in Indonesia ''the confidence of investors in the country … might not hold''.

The report, In Religion's Name, says there were 264 violent attacks on religious minorities in 2012, a 20 per cent increase on 2010. It documents violence against the Ahmadiyya, a minority sect of Islam that Indonesia's Religious Affairs Ministry has declared ''heretical'', and Shiite Muslims, as well as atheists and moderate Muslims. Since 2005, more than 430 churches have been forced to close.

But Wahyu, a spokesman for Indonesia's Religious Affairs Minister Suryadharma Ali, denied the thrust of the report, saying Indonesia was ''the example, or the laboratory of religious harmony''.

''It has the best religious harmony in the world. We can judge that because … we make all big days of the recognised religions in Indonesia holidays,'' Wahyu said.

Many acts of violence were committed by a number of hardline groups such as the aggressive Islamic Defenders Front, which emerged from the Sunni Muslim majority after the fall of former president Suharto in 1998, the report says.