Manus Island looks set to be reopened as an asylum seeker detention centre after Papua New Guinea gave in-principle to support for the move.
The development comes after the High Court of Australia on Monday extended an injunction preventing the transfer of the first asylum seekers from Australia in a swap deal with Malaysia.
AAP reports a spokesman for Papua New Guinea's prime minister saying Peter O'Neill spoke with Australia's leader Julia Gillard and discussed reopening the facility.
Ben Macah says the two leaders reached an agreement but no time frame as yet for opening the facility.
In Kuala Lumpur, the Malaysian government described the court action preventing the transfer of asylum seekers from Australia as just a "hiccup".
Malaysian Home Minister Hishammuddin Hussein says he wants to see the swap deal up and running soon.
Under the controversial agreement, 800 asylum seekers who arrive in Australia by boat will be deported to Malaysia in return for Australia accepting 4000 people who already have refugee status.