Thousands took to the streets this week to denounce the decision to hold the beauty pageant in the world's most populous Muslim-majority nation, with protesters burning the organisers in effigy and branding them "infidels".
The contest opens in Bali tomorrow and later rounds were due to take place in and around Jakarta, with the winner originally set to be crowned at a venue outside the capital on September 28.
Hardline influence is strong in areas of the main island Java not far from the capital.
"All the events will now be held at venues in Bali - it will all be concentrated in Bali, until the closing," coordinating minister for people's welfare, Agung Laksono, told reporters in Jakarta.
He said the government had "listened to what the people wanted". The decision was taken in a meeting between Laksono, Vice President Boediono, and police and tourism ministry representatives.
Protests flared again today, with hundreds taking to the streets on Yogyakarta and Surabaya on Java.
While the vast majority of Indonesians practise a moderate form of Islam, a vocal hardline fringe has succeeded in getting events cancelled in the past.
Last year, pop sensation Lady Gaga axed a concert after hardliners threatened to burn down the venue and criticised her for wearing only "a bra and panties".
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