The US Embassy is warning of a possible terror attack on Indonesia's Bali island on New Year's Eve

American officials put a warning on the embassy's website quoting Bali's governor as saying: "There is an indication of an attack to Bali tonight."

The alert comes six months after twin suicide blasts killed seven people at luxury hotels in the capital Jakarta.

Bali Governor's I Made Mangku Pastika called on people to be alert, but gave no details about the nature of any attack.

"There is an indication of an attack to Bali tonight, but please don't panic, but put your security system to full alert," he said.

Indonesia's counter-terrorism unit says it received a warning but could not verify its accuracy.

Tourists on the party island have been targeted by Islamic militants, with more than 220 people killed in suicide bombings in recent years.

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Confusion over Bali terror attack warning

THE US embassy in Indonesia today said it had received warning of a New Year terrorist attack from the governor of the resort island of Bali, the scene of multiple bombings targeting Westerners.

"There is an indication of an attack to Bali tonight," it said in a statement to US citizens carried on its website, quoting a message from Governor Mangku Pastika.

The embassy said the Bali Tourism Board had widely distributed the governor's message, which added: "Please don't panic, but put your security system to full alert."

The embassy said the message had been "shared verbatim for your information" but added that standard consular safety and security recommendations "remain valid".

But Putu Suardika, head of public relations at the office of the Bali governor, denied that the governor had issued such a warning.

"No, he never said that, either in writing or verbally," Suardika told Reuters. "We never put out any warning either written or spoken. Of course we in Bali, because we have had two bombs in the past, have to remain on alert."

Officials at the Bali Tourism Board could not be contacted, but a spokeswoman for the US Embassy in Jakarta said the statement was a direct quote from the governor of Bali.

"As we understand it, the governor's message had been issued widely to the tourism board and hotels and we felt that it was a serious enough message that we could not not send it out. We were relaying the message verbatim," said spokeswoman Corina Sanders.

Holidaymakers in Bali were on high alert last night after warnings of a New Year's Eve terror attack.

Indonesian woman Annie Made told the Daily Telegraph that police were everywhere in Bali's tourist district.

"All the streets are blocked off, and the hotels. The cars can't come into Legian,'' she said.

"There are police everywhere.''

She said staff at the Bali Aussie Bar and Restaurant in Kuta was preparing for a busy evening with tourists and locals.

"There are police everywhere looking after Bali. We are all okay, we hope nothing happen tonight,'' she said.

"Happy New Year.''

A DFAT spokeswoman said the Balinese Governor, Mangku Pastika had issued a statement of a possible terrorist attack.

"We understand this is a general warning. Indonesian security forces are on heightened alert this holiday season, as has been the case in past years,'' she said.

"Our travel advice for Indonesia has for some time advised Australians to "reconsider your need to travel to Indonesia, including Bali, at this time due to the very high threat of terrorist attack".''

These remind US citizens that Indonesia has been targeted by "violent elements" repeatedly since the Bali bombings of 2002 that killed 202 people, mainly foreign tourists including 88 Australians.

The embassy advises citizens to keep a "low profile" and be "vigilant and prudent at all times".

"US citizens must consider the security and safety preparedness of hotels, residences, restaurants, and entertainment or recreation venues that they frequent," it says.

Police said 7000 security personnel including US-trained counter-terrorism units were being deployed around bars and nightclubs on Bali as the island prepared to celebrate the New Year.