Before West Papua became Indonesian territory, Wibowo oversaw the 1969 referendum dubbed the "An Act of Free Choice" which has since been widely condemned as a sham when only 1025 people were selected to vote.
The Indonesian trainer was also offended by a poster that ridiculed Indonesia's founding ideology, Pancasila.
Pancasila stipulates Indonesia's five principles of religion, civilised humanity, unity, democracy and social justice.
Australia's Defence Minister Marise Payne says she hopes the rift can be resolved when an ongoing investigation is finalised.
"We have indicated our regret that this occurred and that offence was taken," Senator Payne said yesterday.
"We should endeavour to ensure that the material we use is culturally appropriate ... and not gratuitous."
Payne said the matter was being dealt with in a constructive and mature way and that she was expecting her Indonesian ministerial counterpart to visit in February.
Since the suspension started, a visit by a group of Indonesian military staff college students has been cancelled and Indonesia's participation in an upcoming naval exercise is in doubt.
Australian Defence Association spokesman Neil James believes there are deeper reasons for the breakdown of military co-operation and described the saga as a "storm in a tea cup".
"The new Indonesia chief of defence force equivalent is perhaps not as pro-Australian as some his predecessors," he said.
"There's an unfortunate tendency in Australia, particularly in academic and diplomatic circles, every time there is a dispute between Australia and Indonesia, there is an instinctive reaction by many ... to say 'it must be our fault'.
"But just as often it's not our fault," he said.
Indonesia's military chief General Gatot Nurmantyo has been quoted by the ABC saying he stopped sending his best soldiers for training in Australia out of fears they would be recruited as agents.
However, Payne has denied the claim.
The issue is expected to be well and truly ironed out before Widodo's rescheduled visit to Australia in coming months.
He abruptly cancelled his trip late last year after a protest in Jakarta spiralled into violence, with up to 150,000 demonstrators demanding the jailing of the city's Christian Governor for insulting Islam.
No new date has been officially set but planning is well under way.