The Turnbull government faces pressure to amend its latest asylum-seeker plan, with a key crossbench senator calling for doubling of the refugee intake.
Immigration Minister Peter Dutton has said he won't make any changes to a bill he introduced on Tuesday which would ensure asylum seekers who use people smugglers will be permanently banned from Australia.
However, crossbencher Nick Xenophon - whose team holds three key votes in the Senate - has flagged he could support the bill if Australia takes more refugees.
"Australia is a big country with a big heart. I would like to see an even bigger increase in our humanitarian intake," he said on Wednesday.
Senator Xenophon also raised the prospect of his team not voting as a bloc on the bill because he sees it as a "conscience issue".
The intake has been 13,750 places annually in recent years and will reach 18,750 in 2018-19.
Labor took a policy to the federal election of increasing Australia's humanitarian intake to 27,000 by 2025.
Opposition immigration spokesman Shayne Neumann told parliament the draft laws could lead to absurd outcomes, such as preventing future athletes from attending competitions in Australia.
Mr Neumann said the policy was an overreach by a prime minister desperate to appease the right wing of his party and One Nation.
"It's unnecessary legislation and it's nonsensical."
Liberal Democrats senator David Leyonhjelm said there would be an anomaly affecting those resettled in New Zealand as they would have an automatic ability to enter Australia.
Liberal MP Rowan Ramsey said he understood some people's anxiety about such a tough measure, but there were "no easy choices in this game".
The government hopes to have a vote on the laws in the lower house by the end of the week.
Meanwhile, former prime minister Kevin Rudd has accused Malcolm Turnbull of lying about private talks on asylum-seeker policy.
Mr Turnbull has repeatedly claimed that as opposition leader he begged the Labor leader not to dismantle the Howard government's so-called Pacific solution.
Mr Rudd said it was a "total reinvention of history", pointing to the fact Mr Turnbull was not opposition leader in February 2008 when the last asylum seekers left Nauru.
Mr Turnbull told parliament Labor had consistently "failed Australia" in terms of border security.
Labor MP Pat Conroy later said it was fitting the bill was being debated on the day Donald Trump looked likely to be elected US president based on a campaign of "bigotry" and "demonising minorities".
"Because this bill is based on bigotry," he told parliament.
