The Federal Treasurer, Peter Costello has indicated the government has decided to send all future asylum seekers, including any new arrivals from the Indonesian province of Papua, to off-shore processing centres.
The Indonesian Government has reacted angrily to Australia's decision to grant temporary protection visas to 42 Papuan separatists.
And Mr Costello says the government wants to resume close ties with its nearest neighbour.
He says it is a matter for Australia to decide the way it deals with asylum seekers, but will do so in accordance with the refugee convention.