In an effort to combat the spread of the disease, agriculture officials announced plans for mass culls of chickens throughout infected areas.
The government is trying to quell fears after a 5-year-old girl, hospitalized with symptoms of bird flu, died early Wednesday. Test results on the cause of death are expected later in the week.
The H5N1 strain of bird flu has swept through poultry populations across Asia since 2003, killing at least 63 and resulting in the deaths of tens of millions of birds.
While most human cases have been linked to contact with sick birds, the World Health Organization warns the virus could mutate into a form easily spread amongst humans, which could possibly trigger a global pandemic, killing millions.
Indonesia previously said it did not have the ability to oversee mass culls, but quickly changed its course. The UN says the mass slaughter of birds is the most effective way to halt the spread of the virus.
"If we declare one area highly infected, we are going to do a mass slaughter," Minister of Agriculture Anton Apriyantono says.
Farms in which 20 percent of the poultry are infected will be classified as "highly infected."
On Tuesday, the Indonesian government declared a 21-day state of alert against the disease, assigning 44 state-owned hospitals to treat avian influenza patients, and ensuring all receive free medication.
This means patients with symptoms of the disease - including high fever, coughing and breathing difficulties - could be forcibly admitted to hospitals.
Bird flu has claimed 63 lives in Asia - mostly in Thailand, Vietnam and Indonesia. Health officials in parts of Russia and Kazakhstan are also monitoring its spread.
