Terrorist suspect Abu Bakar Bashir denied in a Jakarta court all allegations against him, including raising and giving thousands of dollars to other terrorist suspects.

The radical Muslim cleric, 72, was arrested in August and is accused of helping set up and finance a militant Islamic training camp in Aceh, the isolated province of 4.5 million people on the northern tip of Sumatra Island.

Bashir could face a death sentence after Indonesian police formally charged him last month with inciting terrorism. He previously served more than two years in jail before being cleared of involvement with the proscribed Jemaah Islamiah group.

Prosecutors read out in court a 93-page indictment against Bashir who maintained after that he is only a spiritual leader and that foreigners are trying to involve him with terrorist activities.

"I understand, in principle, that I am being accused of being the leader of a militant group in Aceh," he said. "Such allegations have been engineered and are just empty talk."

Before the court appearance he told journalists that the charges are "all made up ... I did nothing. I was only defending Islam."

Specifically, he is accused of raising $112,000 to buy guns and ammunition and set up a terrorist training camp. He also is accused of giving several suspected terrorists several thousand dollars each, some of which was later handed over to a man called Dulmatin, whom police killed in March.

Dulmatin was one of Indonesia's most wanted men, a militant involved in the fatal 2002 Bali bomb attacks. The United States had placed a $10 million reward for his capture.

Dulmatin, 40, was suspected of being a lead planner for the nightclub bombings that killed 202 people in the tourist district of Kuta on the southern Indonesian island of Bali. He allegedly belonged to Jemaah Islamiah, a militant group with links to al-Qaida.

The Bali bombing in October 2002 was the deadliest act of terrorism in the history of Indonesia. More than three dozen Indonesians died. More than 150 of the 202 dead were foreigners, including 88 Australians. Around 240 people were injured.

Indonesian police stepped up their efforts early last year to uncover and close a suspected training base in the jungle in Aceh. A breakthrough came in February 2010 when police found the camp.

In May police raided the headquarters of Bashir's Jemaah Ansharut Tauhid religious group in Jakarta and arrested three members of JAT on suspicions of having links with the Aceh camp.

The Aceh group was allegedly plotting a major attack on foreigners at luxury Jakarta hotels and several high-profile assassinations, including Indonesian President Susilo Bambang Yudhoyono.

Police picked up Bashir in August.

His trial continues under a heavy police presence around the South Jakarta courtroom where inside around 200 of his supporters were shouting religious slogans in Arabic.

Officers were issued with rubber bullets and armored cars and water cannon were parked nearby to quell any disturbances in the streets next to the courthouse.

Last month, a court sentenced two national policemen each to 10 years in jail for supplying weapons and ammunition to militant groups in Aceh between October 2009 and March last year.

"The defendants supplied 28 firearms, 19,999 bullets and 72 magazines to terrorist groups in Aceh," the judge said in his verdict.

One of the policemen was a guard at the National Police arms warehouse in Cipinang, East Jakarta, when he stole weapons and ammunition. He teamed up with another guard to sell them on the black market in Aceh, the court was told.