Refugee supporters claim the immigration department had put a "freeze" on the application of a now-deceased Sri Lankan asylum seeker because he had reached the Australian mainland.
Leorsin Seemanpillai, 29, set himself alight on Saturday.
He was living in Geelong waiting for his application for a protection visa to be finalised.
Immigration Minister Scott Morrison has cautioned against drawing conclusions about what drove Mr Seemanpillai to self harm.
There had been no visa decision nor had he been told he was being deported.
"This is a terrible and tragic incident and none of us can know the mind of someone in this situation," he told reporters in Canberra on Monday.
But Asylum Seeker Resource Centre spokeswoman Pamela Curr blames processing delays on the application of Mr Seemanpillai, whose boat reached Darwin in January 2013.
Ms Curr understands all asylum seekers who made it to Australia after August 2012 but before the federal parliament passed laws to excise the mainland in May 2013 have had their applications frozen.
"We don't know but maybe Leo would still be alive if his claims were being processed in a timely way," Ms Curr told AAP.
"These direct-entry people were all frozen."
The no-advantage test introduced by the Gillard government in August 2012 did not apply to asylum seekers who reached the mainland.
It was aimed at ensuring those who arrived by boat were not advantaged over people waiting in refugee camps.
Ms Curr said it was six months before Mr Seemanpillai had been allowed to make his refugee status claim and after 18 months he still hadn't had an official interview.
A spokeswoman for Mr Morrison denied direct-entry cases had been frozen.
Australian Greens senator Sarah Hanson-Young said the cruelty of the Abbott Government's refugee policy was pushing people to breaking point
"It's clear that Leo was a casualty of the system," Senator Hanson-Young said.
The minister hit back at what he considered the politicising of the death.
"If they are then that is a disgraceful and grubby and despicable thing for the Greens to do," he told Sky News.
Mr Seemanpillai had been receiving community mental health support "for some time" and was in contact with a case worker as late as last Friday.
There was nothing to indicate during those meetings he had intended to take his own life.
Mr Morrison said he was satisfied Mr Seemanpillai had received adequate assistance while on the bridging visa, with work rights and ongoing mental health support.
The department will conduct a review of the arrangements.
* Readers seeking support and information about suicide prevention can contact Lifeline on 13 11 14 or Suicide Call Back Service 1300 659 467.
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