The federal government will reportedly build a new immigration detention centre near Port Moresby in Papua New Guinea.
The centre will accommodate asylum seekers awaiting deportation after their refugee claims are rejected, the ABC reports.
Immigration Minister Scott Morrison told the broadcaster the transit and removals centre was part of the deal struck by the previous Labor government.
Work on the centre, at Bomana prison outside Port Moresby, is expected to begin next year.
There are about 1000 asylum seekers in detention on Manus Island.
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