Australian Immigration Minister Chris Bowen signed the memorandum of understanding in Sydney with Afghan's Refugee and Repatriation Minister Jamaher Anwary and Rick Towle of the U.N. High Commission for Refugees.
''Never, all through the Howard (government) years, never before today, has there been an involuntary return from Australia to Afghanistan,'' Bowen said. "Why can I say that confidently? Because if they were being returned to persecution they would have been accepted as refugees."
Australia also will help improve processes within Afghanistan's passport office and offer financial assistance and housing for returning failed asylum seekers.
But Bowen also hoped that the agreement will act as a deterrent and show that Australia isn't a soft touch for the thousands of boat people who arrive off Australia's shores each year.
Afghans made up half of the estimated 5,500 boat people rescued by maritime patrol boats and the navy last year.
Many of the boat people are rescued from unseaworthy and overcrowded vessels close to sinking. The majority of people come by way of Indonesia with the help of notorious people smugglers.
Australia's Department of Immigration figures showed around 2,700 of the asylum seekers were from Afghanistan. Around 880 were Iranian, 640 Iraqi and 540 Sri Lankan. Others would be refugee seekers were from Palestine, Kuwait, Myanmar and Vietnam.
Around 650 were of undetermined nationality, the figures show.
The deal with Afghanistan is the latest attempt by the government to deal with the politically sensitive issue of refugees flowing uncontrolled into the country.
Australia began shipping refugees from its overcrowded detention facility on Christmas Island in the Indian Ocean to isolated communities on the mainland, a controversial move ahead of last summer's federal election.
In June the first batches of refugees were shipped off Christmas Island to smaller, remote purpose-built processing centers, including one in the small town of Leonora, more than 400 miles inland in the middle of the deserts of Western Australia state.
But such plans polarized many Australians to the point that the country's Immigration Minister Chris Evans said the immigration debate is "killing" the government. He also said he took full responsibility for the "toxic" discussions in all media.
Another idea was put to the government in Timor-Leste, a mountainous and poor country off Australia's northern coast. It occupies the eastern half of the island of Timor of which the western half remains part of Indonesia.
Timor-Leste's National Parliament eventually voted down the proposal by Australia's newly elected government of Julia Gillard to host a temporary refugee center paid for, and run by, a third party.
The government in Canberra also believed part of the problem is that newly accepted refugees have been urging their family and friends to attempt to enter Australia illegally by boat.
To that end, the Australian government released a hard-hitting Internet video campaign aimed to shock would-be asylum seekers from attempting to cross the high seas.
Australian officials said they hoped the ethnic communities would pass warnings to family and friends overseas considering an attempt to reach Australia illegally.
Video images include depictions of drowning, electric fences around Australian detention centers and a man denouncing people smugglers who killed his sister and daughter thanks to an unseaworthy boat.
The videos, ranging in duration from 45 seconds to nearly 5 minutes, are in Tamil, Sinhalese, Pashto, Farsi, Dari and Arabic and are posted on YouTube on a dedicated channel called "notopeoplesmuggling."