Australia has announced tough new measures to stem a dramatic increase in boatloads of asylum seekers, with a deal to send all boat-arrivals to Papua New Guinea.
The Prime Minister Kevin Rudd announced the plan jointly with his PNG counterpart Peter O'Neill in Brisbane Friday night.
Mr Rudd says in future boat people will have no chance of settling in Australia as refugees.
He added no cap has been placed on the number of people Australia can send to PNG.
The news came as Mr Rudd set out an overhaul of asylum policy before an upcoming a general election.
Mr Rudd says what he calls the hard-line decision was taken to ensure border security and is aimed at dissuading people from making the dangerous journey to Australia by boat.
"From now on, any asylum seeker who arrives in Australia by boat will have no chance of being settled in Australia as refugees. Asylum seekers taken to Christmas island will be sent to Manus and elsewhere in PNG for assessment of their refugee status, if they are found to be genuine refugees, they will be resettled in PNG."
And PNG's leader, Peter O'Neill says he believes strongly that genuine refugees can be resettled in his nation.
As prime minister Rudd has stated earlier, it is not going to be easy, but of course PNG is blessed with a large land mass and a very small population, so there is enough assistance we can give to the Australian in handling this issue of the refugees that the Australian government is facing.
Peter O'Neill's government earlier confirmed its Manus Island detention centre will be expanded to take up to three thousand asylum seekers. There are currently over 200 detainees at the Manus centre.
The conditions of the Australian detention centre on Manus was slammed in a UNHCR report recently, a report Mr Rudd said he and PNG officials would work through following a visit to PNG this week.
And following the news of the new asylum seeker measures, violence flared on Nauru as hundreds of asylum seekers sought to break out of the Australian detention facility there.
300 detainees are reported to have escaped from the centre during the unrest, but their fate is unknown.
A security guard says the rioters gained access to a kitchen and armed themselves with knives and steel bars.
The security officer says several new buildings were set on fire and the medical centre has been destroyed.
At least 15 guards were injured, including a local police officer who was stabbed.
Australia's opposition immigration spokesperson Scott Morrison blamed Labor's newly announced immigration policy for the riot.
Mr Morrison told ABC the riot highlights Labor's poor immigration policy.
Yet another riot, more chaos occurring in centres being run under a Labor government, they don't believe is offshore processing and their record in implementing has been appalling, and more chaos is no surprise.
Police and security guards in Nauru are reported to have restored order at the facility.
Meanwhile, Amnesty International has condemned the measures, saying Australia was turning its back on the world's most vulnerable people.
And Australian advocates of asylum seekers are disappointed by Kevin Rudd's announcement.
The Chill Out campaign director Sophie Peer doesn't think Australia will be meeting its international obligations under the arrangement.
She says because malaria is rife on Manus island, children aged under seven and pregnant women can't be sent there.
But she says it's not clear what the government has planned for them.
We haven't had detail on this policy, there are many, many issues that we would like more clarity from the government about this. Certainly what is going to happen to those more vulnerable groups, new born babies, pregnant women, the elderly.
The Chill Out campaign director Sophie Peer.