The British embassy shuttered its building in Jakarta's central business district on Friday and closed a consular facility in a neighbouring office block that is home to several foreign media organisations and near hotels frequented by Westerners.
Police deployed bomb squads and anti-terror teams in force to the area and said they were taking the threat seriously against it and the nearby Thai embassy.
Dozens of extra police, some carrying rifles, were on guard outside the two embassies on Friday. Several armoured vehicles were also stationed outside.
British embassy spokesman Faye Belnis said the decision to close the embassy and consulate to the public was in response to a "specific bomb threat" to the mission. She said it was not known how long it would be closed.
Thai foreign ministry spokesman Sihasak Phuangketkeow said its Jakarta mission had been closed in response to the threat, but embassy staff continued to work at a secret location.
"Our staff did not enter the building and will not work at the embassy, at least for today. We will re-assess the situation later," Sihasak said.
Jakarta police spokesman Chief Commissioner Ciptono said that anti-terror and bomb detection squads were dispatched to the area around the embassies shortly after the threats were made late on Thursday.
"Two telephone calls were placed to the British embassy and the Thai embassy in central Jakarta warning them of a bomb attack," he said.
Indonesia has been on high alert for a possible attack in recent weeks following warnings by foreign governments that an attack may coincide with the Christmas period.
"Two telephone calls were placed to the British embassy and the Thai embassy in central Jakarta warning them of a bomb attack"
Chief Commissioner Ciptono, Jakarta police spokesman
Australia, Britain, the United States and New Zealand have all advised their citizens to avoid unnecessary travel to the country.
The latest alert comes as Indonesia is preoccupied with a massive relief effort to help victims of the 26 December Asian tsunami, which killed more than 110,000 people on the island of Sumatra.
Thousands of extra troops are being sent to the region to help with the relief operation, further stretching the country's already overburdened security forces.