AFP

Indonesia has declared the coral-rich waters around Bali -- a popular scuba diving spot which is home to the giant Mola-Mola ocean sunfish -- a protected zone.

The 20,000-hectare area around Nusa Penida, Nusa Ceningan and Nusa Lembongan islands will be protected from destructive fishing, waste dumping and coral mining, project leader Marthen Welly said.

"Destructive fishing is carried out by fishermen using cyanide and explosives," Welly, of the conservation group The Nature Conservancy (TNC), told AFP on Sunday.

"Many ships also throw anchors on the coral reefs and hotels and households dump wastes causing water pollution. Now they can't do these anymore," he said.

Guidelines for marine tourism will also be drawn up and zones carved out for various activities including fishing, tourism and seaweed mining, Welly said.

"We'll need to consult the community further and we hope to do this within six months," he added.

The islands are part of Coral Triangle, considered the world's richest underwater wilderness which stretches across six nations between the Indian and Pacific oceans -- Indonesia, Malaysia, the Philippines, East Timor, Papua New Guinea and the Solomon Islands.

Divers from all over the world arrive at the islands between July and September in the hope of seeing the Mola-Mola, a rare two-metre-long ocean sunfish.

The district government will provide 300 million rupiah ($A34,025) and aid agency USAID and TNC will each provide $US50,000 ($A50,633) a year to run the project, TNC Indonesia director Arwandrija Rukma said.

Maritime Affairs and Fisheries Minister Fadel Muhammad said the project will contribute to the government's target of creating 20 million hectares of maritime conservation parks by 2020, up from around 13 million currently.

"The establishment of MPA (Marine Protected Area) is a concrete step taken by the government to implement the plan of action under the Coral Triangle Initiative," he said.

The Coral Triangle Initiative, which was formed in 2007, calls for stronger international cooperation to combat illegal fishing and environmental destruction in an area half the size of the United States and home to half the world's coral reefs.