A search operation involving a helicopter and four boats had focussed on the area off Sumbawa, east of Bali, after the Afghan asylum seekers made a distress call to Australia late on Wednesday.
Immigration Minister Chris Bowen told Sky News Indonesian authorities have notified him of the boat's discovery this morning on the south coast of Lombok, east of Bali.
"The Indonesian search authority has located the boat in Lombok," he said on Sky News.
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"It appears that the people on board have returned to Lombok."
Mr Bowen says he is relieved a potentially dangerous situation has been resolved.
"It's been a big worry over the last 36 hours or so about what would happen to this boat," he said.
He says the incident highlighted the need for the Federal Government to implement policies such as offshore processing to deter people from travelling to Australia by boat.
