Prime Minister Tony Abbott has defended a decision to gift two refurbished patrol boats to the Sri Lankan navy in efforts to stop people smugglers.
Mr Abbott revealed the $2 million deal in Colombo where he is attending the final day of the Commonwealth Heads of Government Meeting.
The rebuilding is to be financed from the Customs budget and comes with a memorandum of understanding (MoU) between the two governments, he said.
The prime minister said people smuggling was an "evil trade" and potentially hundreds of Sri Lankans had drowned trying to make the journey to Australia.
"The vessel is being made available for humanitarian purposes and search and rescue purposes," Mr Abbott said.
"What we get from Sri Lanka is close and constructive cooperation."
This year 14 asylum seeker boats have travelled directly from Sri Lanka to Australia, compared with 120 in 2012.
The Sri Lankan navy undertook at least 12 on-water interceptions in 2013.
About 4000 people have been brought back to shore since 2009.
Sri Lanka's chief of navy Jayanath Colombage said the navy was taking the issue of stopping boat journeys "very seriously".
He said the vessels would also be used to keep the Indian Ocean "free of maritime crime".
Mr Abbott said the MoU linked to the ships covered the level of co-operation and "safety of life at sea".
The retired Customs patrol boats will be handed over in mid 2014.
A number of Sri Lankan navy officers have been arrested in recent months for helping people smugglers.
Mr Abbott said the arrests were a sign that the government was taking the issue seriously.
Former immigration minister Tony Burke said "a lot of questions" surrounded the decision.
"I'm not sure what the conditions are on how those vessels can and can't be used," he told ABC TV on Sunday.
The opposition and Greens will use Senate estimates this week to unveil detail about the deal and the broader Operation Sovereign Borders.
The Commonwealth summit has been mired in controversy over Sri Lanka's treatment of minorities, human rights abuses and alleged war crimes at the end of three decades of conflict.
Greens leader Christine Milne said Mr Abbott, who says he's been reassured the Rajapaksa government is "making progress", should take a more humanitarian approach to the asylum seeker issue.
"I don't think Australians who genuinely thought that stopping the boats was about saving lives will feel comfortable knowing that 'stop the boats' now means preventing people from running away from torture and condemning them to human rights abuses," she said.
A Sri Lankan journalist told AAP finding a people smuggler was easy along the southern and western coasts and the cost was about 1.5 million rupees ($A15,000) per person.