Australia's government has abandoned a refugee-swap deal with Malaysia and says it will now process asylum-seekers on Australian soil.
A day after she celebrated passing landmark carbon tax laws through parliament's lower house, Prime Minister Julia Gillard was forced to dump the Malaysian plan because she did not have the numbers to change migration laws to allow the refugee swap.
If Ms Gillard had pushed for a vote, the laws would have been the first government bill in 80 years to be defeated in the House of Representatives, leaving her minority government open to opposition accusations she cannot control parliament, Reuters reports.
Earlier this year, Ms Gillard announced that East Timor would host a centre, but failed to gain support from its government for the plan.
Asylum seekers are a hot political issue in Australia and Ms Gillard, well behind in opinion polls, has been fighting opposition claims she is weak on border protection due to a wave of new refugee boat arrivals in the past two years.
Her minority government relies upon support from one Green and three independent members of parliament for a one-seat majority, but the Greens opposed the Malaysia plan and Ms Gillard was unable to convince any opposition MPs to support the change.
The Prime Minister announced details of the refugee deal with Malaysia in July under a policy designed to deter people-smugglers and asylum-seekers from sailing to Australia in leaky boats, mainly through Indonesia.
However, the deal, which would have seen Australia send 800 asylum seekers to Malaysia and accept 4000 refugees in Malaysia, was ruled invalid by Australia's High Court because Malaysia has not signed the United Nations' refugee convention.
