Malaysia has expressed its disappointment at the collapse of its people swap deal with the Gillard government, saying the arrangement would have helped tackle one of the "hidden horrors" of the modern world.
Prime Minister Julia Gillard on Thursday conceded she could not implement the controversial deal because she could not get legislation aimed at reviving it through the parliament.
Ms Gillard said the government remained committed to the deal but would for now revert to onshore processing.
A Malaysian government spokesperson on Friday issued a response to the government's decision.
"People trafficking is one of the hidden horrors of modern life and the arrangement between our governments would have tackled it in a way that protected the interests of Australia, Malaysia and, above all, the migrants involved," the spokesperson said.
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"Building on the momentum established over the past few months, we will continue to work with Australia to find new and effective ways to deal with this 21st century trade in human misery."
Ms Gillard on Friday stepped up her attack on Opposition Leader Tony Abbott for his role in blocking the legislation.
"We are at risk of seeing more boats," she told ABC Radio on Friday.
"If we do see that, there is one person to blame, Tony Abbott, for this mindless negativity, his reckless strategy which has brought offshore processing to an end."
The coalition says it will back Labor's migration law changes only if offshore processing is limited to third countries that have signed up to the UN refugee convention. Malaysia is not a signatory.
Mr Abbott is not giving ground on the issue, telling the government it could have offshore processing anytime.
"All they have to do is accept the opposition's amendment," he told ABC Television.
Mr Abbott took aim at the prime minister blaming her stubbornness for the government's dilemma.
"She should have known weeks ago that the Malaysia people swap was dead, she has never had a plan B."
The Australian Greens called for an end to the major party blame game.
"Rather than blaming each other, let's get on with the job we've already signed up to do under the refugee convention," Greens immigration spokeswoman Sarah Hanson-Young said.
The Greens are happy with the return to onshore processing but want it made more efficient and humane.
Senator Hanson-Young also has called for an increase in Australia's humanitarian intake, from just under 15,000 now to more than 20,000.
Immigration Minister Chris Bowen said he had not considered heeding opposition immigration spokesman Scott Morrison's call he resign over the deal's collapse.
"He knows that this is the best thing for Australia and yet he refuses to vote for it, and by his perverse logic he then thinks I should resign because he won't vote for a piece of legislation in the national interest.
"I treat that with the disdain it deserves," he added.
Under the Malaysia deal the government wanted to send 800 asylum seekers to Malaysia in exchange for 4000 already-processed refugees.
The government says it will now make greater use of bridging visas for asylum seekers who arrived by boat to take some pressure off detention centres.
The government will also continue putting some asylum seekers into community-based detention and says it has no plans to open new detention centres.
