The Australia's Foreign Minister says Papua New Guinea has agreed to house asylum seekers on Manus Island for another year.
A detention facility on Christmas Island for asylum seekers headed for Australia has not yet been completed.
Alexander Downer said he thought the 12 month extension would satisfy Australia's needs and concerns.
The Department of Foreign Affairs and Trade later said the agreement had yet to be finalised and details were being negotiated.
A Department spokesman said PNG had offered to extend the agreement for 12 months on the proviso that there are only up to 1,000 detainees.