The Australian Foreign Minister, Alexander Downer, says Nauru is effectively bankrupt.
The Australian Government says it will give the country emergency aid of nearly four million US dollars.
That will complete a package agreed last December when Nauru said it would accept more of the asylum seekers Australia was refusing to process on its own territory.
Mr Downer says in his six years as Foreign Minister he had not seen a country in as much financial difficulty as Nauru faces.
He has sent a former top diplomat Greg Urwin to consult with Nauru over the crisis.
