Some 260 Sri Lankan asylum seekers are reportedly threatening to blow up their ship if the Indonesian military forces them ashore at a port in West Java where they are detained.
Indonesian navy spokesman, First Marshal Iskander Sitompul, told the ABC that many of the men, women and children aboard the boat feel traumatic about going ashore because they have been "disturbed and tortured" during their journey from Sri Lanka, which began in late July.
He said they lived in the jungle in Malaysia for several months before a people smuggling syndicate took their passports and promised to deliver them to Australia.
A spokesman for the group told The Australian newspaper that they were planing to blow up the boat and jump into the ocean if the Indonesian navy attempts to forcibly move them ashore.
The ABC reports the cargo boat was located after a tip-off from Australian authorities and a phone call to Indonesia's President by Prime Minister Kevin Rudd.
Extra beds on Christmas Island
The Australian government has this week installed an extra 200 bunk beds to meet what it fears is a growing demand for accommodation on the Christmas Island detention centre.
More than 1000 people are detained on Christmas Island and another 58 will arrive soon after being picked up off Ashmore Reef.
Nearly 700 asylum seekers have been intercepted in Australian waters and ferried to the island facility over the past six weeks.
The federal opposition claims that the increase in the number of boat arrivals is because of the winding back of the Pacific Solution policy of the Howard government.
Opposition immigration spokeswoman Sharman Stone says the federal government's border protection policies are in chaos.