A report from Malaysia says asylum seekers who arrive in Australian waters will not be accepted before the two countries finalise a refugee swap deal.
The federal government announced on 7 May that Malaysia would take 800 asylum seekers in return for Australia resettling 4000 Malaysian refugees.
Since then more than 100 asylum seekers have been intercepted in Australian waters.
The ABC reports the federal government says they will all be processed overseas, even though it has not finalised the deal.
But the Malaysia Star newspaper quotes home affairs minister Datuk Seri Hishammuddin Hussein as saying Malaysia will only accept asylum seekers who arrive in Australia after the agreement is finalised.
''Hishammuddin said the batch was not part of the transaction as the deal had not been finalised,'' the paper reported.
Australian Immigration Minister Chris Bowen maintains Australia is still negotiating with Malaysia about what will happen to asylum seekers who arrive before the refugee swap deal is finalised.
On Wednesday, a spokesman for Mr Bowen said the government accepted that ''no person will be sent to Malaysia until the arrangements are finalised''.
The ABC reports Mr Bowen has also confirmed Australia would discuss a similar deal with Thailand and would also be interested in discussing an agreement with Indonesia.
