The fully-enclosed vessel discovered by Indonesian authorities was one of 11 purchased by the Abbott government in a bid to stop asylum seekers from reaching Australia, News Limited reports.
The "unsinkable" orange lifeboats can carry up to 90 passengers and are air-conditioned, fitted with safety and navigational equipment and stocked with food and water.
It's claimed the pod-like vessel found in a remote corner of Java had been transporting around 60 asylum seekers, who scattered into the Indonesian jungle when the vessel came ashore.
A spokesman for Immigration Minister Scott Morrison refused to comment about the lifeboats, saying the government would not provide details about operational matters related to border security.
Mr Morrison has previously refused to confirm reports the government was planning to buy 16 hard-hulled lifeboats to combat the practice of asylum seekers sabotaging old fishing boats at sea.
But in mid-January, Operation Sovereign Borders commander Angus Campbell did confirm the purchase of the lifeboats, while declining to say how they would be used.
The development alarmed Indonesian foreign minister Marty Natalegawa, who expressed concern Australia could be going further than turning boats back by potentially facilitating the movement of asylum seekers.
