Downer said officials from both countries met earlier this month in Darwin and agreed to a program of talks that should ultimately settle the ownership of billions of dollars worth of gas reserves located beneath the Timor Sea.
"I think the next round of talks will take place in...April next year," Downer told the National Press Club.
"So I think we have a process in place and I think we can work these things through in a sensible way," he said.
"We operate within the constraints of international law... These things take time," Downer added.
The government of East Timor recently called on Australia to cease production in those oil fields that lie within disputed areas of the Timor Sea until a permanent maritime treaty is reached.
It also accused Australia of trying to stall the negotiation process, which East Timor hopes will be completed in three to five years.
Last year East Timor, fresh from winning independence from Indonesia, claimed a maritime boundary extending 200 nautical miles from its coast, overlapping Australia's own claimed boundary and putting in doubt the ownership of the Timor Sea's vast gas reserves.
While the two countries have agreed a treaty to carve up an area of the Timor Sea and provide fiscal certainty to developers, the deal is only an interim arrangement pending a fixed boundary.
That treaty favored East Timor, with Australia agreeing that the country should take a 90% share of the so-called Joint Petroleum Development Area.
The JPDA had replaced a similar agreement between Australia and Indonesia under which the area was split 50:50.
But other major gas reserves lie outside the JPDA in waters long claimed by Australia, and they are now subject to East Timor's boundary claim.
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