A former Dutch colonial hall converted into a place of worship in the 1950s, the mosque, painted in a faded lime green, is tucked down a ramshackle alley dotted with makeshift restaurants and kiosks.

Next door is a Defence Ministry building. On the other side, a swanky new apartment complex. Barely 200 metres away is the fortified compound for US embassy workers. Less than one kilometre away, the US embassy itself.

Australian ambassador Paul Grigson's residence is in the same suburb.

But Fairfax Media can now reveal a shocking secret – the mosque that lies in the geographic heart of Indonesia's power elites is an active recruitment centre for Islamic State (IS), the terrorist group that has seized territory in Syria and Iraq and the imagination of radical Islamists across the world.

Exclusive video footage, provided to Fairfax Media by Indonesian terrorism analyst and documentary filmmaker Noor Huda Ismail, shows a group of young Indonesian men inside al-Fataa pledging allegiance to the IS leader and so-called "caliph" of Muslims, Abu Bakr al-Baghdadi.

Led by a former devotee of the extremist cleric Abu Bakar Bashir, Fauzan al-Anshori, the men gather in a tight circle, their hands entwined in the centre as they recite the "bayat", or pledge, in a mix of Indonesian and Arabic.

The young men first proclaim an oath of devotion to Sheikh Ibrahim bin Awad bin Ibrahim al-Husseini al-Qurayshi, the formal name of Baghdadi.

"I enjoin you to have awe of Allah and that you listen and obey, in good times and bad times," they then chant on the floor of the mosque, before finishing the pledge amid smiles and congratulations.

It's not the only time IS recruiters have attended the mosque. Radical cleric and IS devotee Syamsuddin Uba has been a regular visitor, leading marches of jihadists carrying the IS flag through Jakarta. He would have been preaching there this week, if not for his arrest last week in eastern Indonesia.

The administrator of the mosque, Farihin, tells Fairfax Media he does not support IS, also known as ISIS or ISIL.

Even so, he admits a pro-IS banner was hung outside the mosque until authorities forced them to take it down about a month ago, and that IS supporters are allowed to lead religious classes there.

"Anyone can come here as long as their rituals are in accordance with sharia," he says. "The activities are just a response to what is happening in the Middle East."

Farihin denies that IS recruitment takes place at al-Fataa, his assurance undercut somewhat when an associate, Budi Waluyo, volunteers that he supports IS and explains how the recruitment works.

"So many people are interested in Islamic State since the caliphate was declared by Sheikh al-Baghdadi [in June last year]," he says. "They are curious and come to listen. They have different levels of understanding and knowledge of the Koran.

"Some get really deep into the doctrine. Then we talk about different things like how to collect finances. The groups become smaller and smaller and only a few are asked to make the bayat."

A rigorous selection process must be completed before you can travel to Syria, he adds.

Al-Fataa is certainly on the radar of Indonesia's security agencies but the fact that pro-IS activities occur so openly there, right next door to the Defence Ministry, is indicative of what many analysts believe is an inadequate response by the Indonesian government to a rising security threat.

As in Australia, the fear is that the growing numbers of Indonesians heading to Syria and Iraq to fight for IS will return, battle-hardened, and launch terrorist actions back home.

After a six-year halt to the violent extremism that besieged the country for seven years from the first Bali bombings in 2002 and took hundreds of lives, including 95 Australians, will the emergence of IS re-energise violent extremism in Indonesia?

Thousands of Indonesians are believed to have made the pledge of allegiance to Islamic State in mosques, prayer rooms, homes and prisons across the country.

At least 300, and possibly as many as 700, Indonesians have travelled to Syria and Iraq to join IS.

According to Budi, there are more than 300 with passports ready to go.

"It's not just ordinary people," he says. "Civil servants, police, TNI [military personnel] too."

Once in the Middle East, Indonesian jihadists connect with a dedicated military unit for south-east Asian recruits – Katibah Nusantara – in the north-eastern Syrian town of al-Shaddadi.

This hub for Indonesian, Malaysian and Filipino jihadists has its own school and media operation, which trumpets alleged victories on the battlefield via Indonesian-language websites and social media platforms.

In recent months it has posted accounts of the capture of Kurdish-held territories in northern Syria by the unit and a disturbing video of children undergoing weapons training and vowing to become holy warriors.

Like all of the 20,000 foreign fighters in Syria and Iraq, there is a potent attraction for Indonesians in participating in the creation of an Islamic caliphate, the final battle between good and evil supposedly foreshadowed in Hadith literature, the collection of sayings of the prophet Muhammad.

But many are also attracted by the prospect of education and the salary offered by IS to its soldiers, which is significant in a country where tens of millions live on less $2 a day.

Katibah Nusantara also boasts of financially supporting the families of its martyrs in Indonesia.

It's a sophisticated operation that has evolved rapidly in the two years since IS established a foothold in Indonesia.

At first, the militant group relied largely on imprisoned clerics who had pledged allegiance to the group, most famously the notorious spiritual leader of Jemaah Islamiah (JI), Abu Bakar Bashir, and another, more influential cleric, Aman Abdurrahman.

Incarcerated in the penitentiary complex on Nusakambangan in central Java, the place where Australian drug smugglers Myuran Sukumaran and Andrew Chan were executed in April, Abdurrahman has set up a blog to translate IS propaganda and lure Indonesian recruits.

While Bashir and Abdurrahman largely tapped into existing radical Islamist networks, including the children of the Bali bombers, new ones are emerging that are increasingly difficult for authorities to monitor.

The networks include members of the diaspora of some 4 million Indonesian migrant workers living abroad who raise funds, distribute propaganda and facilitate the travel of jihadists from Indonesia to Syria and Iraq.

According to one source intimate with the latest intelligence, those networks stretch from Malaysia through to Taiwan, Macau, Hong Kong and the Gulf Arab monarchies.

It appears, says the source, that al-Fataa mosque is a "node" in these networks.

Then there are the growing numbers of Indonesians self-radicalising, wooed by IS propaganda on websites and social media.

Among them have been students as young as 16, food hawkers and, reportedly, pilots. Inspired by online jihadist publicity, a brigadier in Indonesia's national police, Syahputra, travelled to Syria in March. He reportedly died in combat, and was hailed as a martyr by Indonesian militants.

In an interview for Noor Huda Ismail's documentary Jihad Selfie, Fauzan al-Anshori laughs as he describes how social media is "speeding up the revolution".

"It is the Jew who invented Facebook, what else, well, [messaging app] whatsapp, for instance," he says. "Thank God it was the infidels who invented them but we're the ones who use them."

Indonesia's Muslim community of more than 200 million people is overwhelmingly moderate but the country has grappled for more than a decade with a small but virulent group of violent Islamist extremists.

In recent years, Indonesian security authorities have led a hugely impressive effort to disrupt JI, capturing or killing hundreds of members and splintering the organisation behind a series of deadly bombings across Bali and Java from 2002 to 2009.

But the rise of IS is new terrain for counter-terrorism authorities.

"Indonesian police have done a good job in the past," says Noor Huda Ismail. "But I fear they are oblivious to the risks in the present. I don't want to be an alarmist but the threat posed by Islamic State is real. It is expanding and there is a new cluster of terrorists who operate differently to the old ones."

Certainly IS has spoken about its objective of turning south-east Asia into a province of its worldwide caliphate.

It is a "grandiose" objective highly unlikely to succeed but, says Singapore's Prime Minister Lee Hsien Loong, "the threat is no longer over there; it is over here".

Nasir Abbas, a former senior JI member who rejected terrorism and now lectures in terrorism studies at the University of Indonesia, says IS is playing a "long game".

"They are not just going to Syria to fight there. They have the intention to come back to this country and do something. It's serious."

Abbas says they are inspired by the prophet Muhammad, who fled Mecca for Medina – the Hijra, or migration, from which the Islamic calendar begins – but returned in triumph to Mecca almost a decade later to create an Islamic state.

"They are playing a long game. That's why they are bringing their children to Syria."

The most immediate concern is a return of the mass-casualty attacks that plagued Indonesia from 2002 to 2009, or the emergence of so-called "lone wolf" attacks by IS-inspired militants in Western countries.

So far, the call from the chief IS spokesman Abu Muhammad al-Adnani for its followers to kill "infidels" wherever they find them and by any means necessary has gone unheeded in Indonesia.

But Twitter exchanges between Indonesian fighters in Syria and followers in Indonesia viewed by Fairfax Media have jihadists regurgitating Adnani's advice to "smash [the infidel's] head with a rock, or slaughter him with a knife, or run him over with your car, or throw him down from a high place, or choke him or poison him".

In one exchange, a fighter who calls himself Abu Karimah Indonesia tells a fellow jihadist apparently frustrated by his inability to travel to Syria: "Our leader makes jihad easy for you. Kill any salibis [crusaders] you can find. Salibis can easily be found.

"Process your target. The bigger the better. But if it's difficult, it's more important in jihad to simplify and do it sooner.

"You can use anything. For example, a car. Video the process … run them over while passing."

In "official" videos posted on YouTube by Indonesian IS adherents in Syria, threats of attacks on Indonesian soil have centred on attacking police, military and government figures.

They have also flagged a plot to break Abdurrahman and Bashir out of Nusakambangan prison.

Sidney Jones, a Jakarta-based terrorism analyst with the Institute of Policy Analysis and Conflict, says there are a number of scenarios under which IS could order – or inspire – terrorist attacks in Indonesia.

For the time being, however, she believes that IS will be preoccupied with its battle in Syria and Iraq and solidifying its self-proclaimed caliphate.

"They need Indonesians for fighting," she says.

Experts on terrorism are generally unified in assessing that the threat posed by IS is rising, and that the Indonesian government is responding poorly to the challenge.

While former president Susilo Bambang Yudhoyono "banned" IS last year, his edict has "no legal force", Jones says.

There are no laws in Indonesia prohibiting membership of IS, training with it or fighting with the group overseas. Prosecutors have had to rely on other offences – such as links to domestic terrorist activities and passport violations, among others – to secure jail time for IS members and recruiters in the courts.

Efforts by the Ministry of Information to shut down pro-IS websites and blogs have been largely futile. The domain names of the sites are simply tweaked and continue to distribute jihadist propaganda.

New terrorism laws are being drafted by Indonesia's anti-terrorism agency but, Jones says, very few members of Indonesia's parliament see the IS threat as a top priority.

They are preoccupied with other bills and controversies – many of them related to their own self-interest, such as laws and regulations governing upcoming regional elections and political party financing.

It could be years, rather than months, before new laws are enacted. In the meantime, more Indonesians are likely to be seduced by IS.

"I'm still waiting for my chance to go to Syria," says Budi, animated and excited by the prospect. "I'm still trying to persuade Farihin to go as well."

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