An Iranian boy orphaned on Christmas Island and family members caring for him will be released from detention and moved to Sydney.
Seena was one of 22 survivors from the asylum-seeker boat that broke up off Christmas Island on December 15, killing up to 50 people, including his parents.
His return to Christmas Island after his father's funeral in Sydney sparked controversy and Immigration Minister Chris Bowen has headed off a legal challenge against him and his department by human rights lawyers on the issue.
Mr Bowen said he had acted on initial advice from the immigration department to keep the 22 survivors together as a group to be processed.
"At the time I said I didn't want to break him up from that family on Christmas Island was my instruction to my department," Mr Bowen told the Ten Network. But he backed down on Thursday, as mourners were returned to Christmas Island after attending eight funerals in Sydney on Tuesday.
Mr Bowen said he had called on his department to fast-track processing for the boy and his surviving family in detention, including an aunt who is caring for him.
"So I took the view that to remove him from those family members who have been caring for him on Christmas Island and put him with family members in Sydney was probably on balance not the right way to go."
A number of checks had to be done with other agencies for the adults involved ahead of the decision.
"I have been advised today that process is complete and he and the family who have been looking after him on Christmas Island can be released into the community, as I've been working on for several days," Mr Bowen said.
Christmas Island shire president Gordon Thomson described the government's decision to return Seena and his family to the remote Australian territory as "stupid and silly".
"The boy in particular is in a terrible way," Mr Thomson told ABC Radio.
"I understand that he goes to the gate every time a bus bringing a new group of refugee to Christmas Island turns up at the detention centre. "He is waiting at the gate looking for his mother and his father."
The body of Seena's mother was not found. Mr Bowen said he could understand people were upset and angry the boy had not been released immediately. Head of the government's health advisory panel on immigration Louise Newman was also at odds with the minister over Seena's detention.
Ms Newman said all the children involved in the December tragedy were "at an acute risk of mental disorder".
"Having those children come to the mainland, meet with other families who could potentially be very appropriate and supportive people in their lives, then to face yet another separation back to Christmas Island, the site of their traumatic experience, is really quite bizarre," Prof Newman told ABC Radio.
A house in Sydney close to the family's other relatives is being sought for them to move into.
"It'll happen next week, I hope to finalise the paperwork tomorrow," Mr Bowen said. Mr Bowen said he would have been more popular if he had taken Seena out of detention and into the care of his relatives near Bankstown.
"I took the view it would take longer but be more controversial and it was better to get it right and do it properly and move all the people out of detention that have been with him."