Prime Minister Kevin Rudd has announced a new agreement with the Pacific Island nation of Nauru, which like Australia's deal with Papua New Guinea, will deny asylum seekers the chance to resettle in Australia.
But the Opposition says it's just a ploy to win votes.
Mr Rudd and the president of the Republic of Nauru, Baron Waqa, signed the memorandum of understanding at a press conference in Brisbane on Saturday.
The deal supercedes the one struck between the nations last year and allows for asylum seekers to not only be processed in the Pacific Island nation, but also to be settled there.
"No matter where people smugglers try to land asylum seekers by boat in Australia, they will not be settled in Australia," Mr Rudd told reporters.
"This is our core principal."
The Nauru agreement is similar to the deal struck with Papua New Guinea's prime minister, Peter O'Neill, two weeks ago and is the latest salvo in Mr Rudd's tough new approach to asylum seekers.
Immigration Minister Tony Burke attended Saturday's announcement and agreed the number of asylum seekers sent to Nauru would be small.
They would comprise families or unaccompanied minors and a new site to house them had been chosen, he said.
The most urgent priority though was expanding the capacity of the island nation's prison, he said.
Australia will provide $29.9 million in aid to Nauru in 2013-2014 under the plan.
A further $17 million will be spent on rebuilding the prison, which was damaged in a recent riot on the island.
Funds from a contingency reserve will also be allocated according to the number of refugees Nauru accepts.
Mr Burke flagged the possibility of reaching similar deals concerning refugees with other nations in the region.
"I'm prepared to say there are other countries who have raised this with us as well," he said.
"There are a number of countries within the region who have signed the convention and who have a genuine commitment to wanting to take a regional approach, and if we're able to reach agreements with them then we will."
Opposition immigration spokesman Scott Morrison said the plan was "elaborate staging" by Labor with no real substance.
"Nauru will play no real role in offshore processing arrangements for the foreseeable future under Labor," he said in a statement on Saturday.
"This announcement is just a patch-up for the devastation of the riots that cost taxpayers up to $60 million and was allowed to occur on Labor's watch."
The Australian Greens said the government had hit a new low on refugee policy.
"This is just more cruelty at the cost of Australia's generous heart and it is trashing our global reputation," Greens Senator Sarah Hanson-Young said in a statement on Saturday.
"It seems there is no limit to the cruelty that either Kevin Rudd or Tony Abbott are prepared to inflict on refugees in their race to bottom as they race to the polls."
