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SYDNEY (Reuters) - An Australian navy vessel came to the aid of a suspected asylum seeker boat in distress south of Indonesia on Friday, as leaders of the two countries met to discuss refugees, one of the key issues in Australia's upcoming general election.

The boat, around 42 nautical miles south of Java, had requested assistance and been spotted by a customs surveillance aircraft, Australian Customs and Border Protection said.

A navy patrol ship had arrived at the scene and started to assess the situation, a spokeswoman for the Australian Maritime Safety Authority (AMSA) said by telephone.

"It's still upright. The people seem all OK," she said. Eighty people were on board.

The boat called the AMSA earlier and reported it was taking on water, she said.

Australian Prime Minister Kevin Rudd is visiting Indonesia on his first overseas trip since being reinstalled to address sensitive bilateral issues, including asylum seekers, with Indonesia President Susilo Bambang Yudhoyono.

"It is not fair if (this issue) is only charged to Indonesia and Australia," Yudhoyono told a joint press conference in the Indonesian city of Bogor, south of Jakarta. "Boat people come from Afghanistan, Iran and Myanmar, while the transit countries can be in Thailand, Malaysia or Indonesia."

Refugees seeking asylum in Australia often set sail from Indonesia or Sri Lanka, heading for Australia's Indian Ocean territory of Christmas Island in dangerous and overcrowded boats, with the help of people smugglers.

Since 2001, almost 1,000 people have died at sea while attempting to reach Australia.

Rudd is seeking to defuse voter unease ahead of elections scheduled for September and is expected to take a tougher line on refugees than his predecessor, Julia Gillard.

Rudd replaced Gillard as prime minister in a Labor party vote last month after successive polls predicting a Labor government washout at the election.

(Reporting by Maggie Luyueyang in Sydney, Fergus Jensen and Rieka Rahadiana in Jakarta; Editing by Nick Macfie and Ron Popeski)

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