Seventy-eight asylum seekers rescued in international waters by an Australian customs vessel will be taken to Indonesia to have their refugee claims processed.
Australian Prime Minister Kevin Rudd and Indonesian President Susilo Bambang Yudhoyono agreed during a bilateral meeting in Jakarta that they should be taken to Indonesia for "humanitarian reasons".
The group, believed to be Sri Lankans, was picked up on Monday in Indonesia's search and rescue zone, heading towards Australia.
The BBC reports there has been a tenfold increase in the number of asylum seekers reaching Australian waters this year.
The opposition blames Mr Rudd's government for relaxing the country's refugee laws.
Mr Rudd was in Jakarta on Tuesday for the inauguration of President Yudhoyono to his second term in office.