Indonesia's refusal to admit two Australian journalists traveling with the White House press corps today posed a potential political embarrassment to President Reagan, who has been saying that the "winds of freedom" are blowing in Southeast Asia.

The Reagan administration has been told that Indonesian visas will not be issued to the two correspondents for Australian Broadcasting Corp., Richard Palfreyman and James Middleton, according to White House spokesman Larry Speakes.

The action is part of an Indonesian retaliation barring Australian journalists because of an April 10 article in The Sydney Morning Herald charging that Indonesian President Suharto had enriched himself, relatives and business associations through government contracts and favoritism.

Speakes said that the U.S. Ambassador to Indonesia, Paul Wolfowitz, and other officials had urged the Indonesians for some time to allow "the widest possible access for the international press to news events in Bali," where Reagan will meet with foreign ministers of the six-member Association of Southeast Asian Nations.

"We requested several times that all journalists traveling with the president be admitted during his visit to Bali," Speakes said. "The final decision on this is up to the Indonesian government."

While Speakes said the two Australian correspondents would be allowed to board the White House press charter Monday morning, the Australian network decided late in the day not to contest the issue further. Palfreyman and Middleton posted a telegram they received from the Indonesian Information Ministry on the bulletin board in the White House press room here which told them they would not be allowed to enter Bali.

The correspondents said in a note that based on this information their company had decided to "withdraw" from the Bali portion of the trip and send them directly to the economic summit in Tokyo. The incident came at a time when White House officials have been placed on the defensive at briefings about Suharto's business dealings, a recent crackdown on Indonesian dissidents, and human rights abuses in the former Portuguese colony of East Timor, which Indonesia incorporated in 1975 International human rights organizations charge that 100,000 residents of East Timor have been killed in the past decade by Indonesian security forces.

White House officials said that Wolfowitz, who recently became the U.S. ambassador in Jakarta, "went to the mat" for the Australians and was rebuffed three times by high-ranking government officials.

Third-country nationals traveling on the press plane have in the past been refused entry into the People's Republic of China and other communist countries. But U.S. officials said the Indonesian action was an embarrassment because it advertised the lack of political freedom in the country at a time when Reagan has made the spread of political and economic democracy in the region the principal theme of his 13-day Pacific trip, which also will take him to the Economic Summit in Tokyo.

"The foreign ministers that we will meet in Bali represent nations that have each in large part embraced human liberty, both political and economic," Reagan said in Honolulu.

Today, Speakes and his deputies tried to turn aside questions about the human rights situation in Indonesia. Deputy Press Secretary Edward P. Djerejian said that Reagan would not raise the East Timor issue in his meetings with Suharto, although Secretary of State George P. Shultz has raised it in the past with Indonesian officials. Djerejian said that Suharto's business dealings are "an internal matter."