But the government of Australian Prime Minister Julia Gillard already is facing heavy political fallout from opposition parties over the agreement's details and the estimated cost of financing the deportations.
The deal, announced in May and signed in Kuala Lumpur this week, means Australia can send 800 asylum seekers to Malaysia over the next four years. In return, Australia will take 4,000 bona fide mostly Myanmar refugees from Malaysia.
The vast majority of the asylum seekers in Australia arrive in unseaworthy boats after a perilous journey of thousands of miles and after paying notorious human traffickers for their passage.
The Gillard government, as previous governments, is wrestling with an annual influx of thousands of boat people. Australia's Department of Immigration said 134 boats carrying 6,535 people arrived in 2010.
More than 1,000 boat people have arrived this year. Detention centers on the mainland and also the main center on Australia's Christmas Island are full or nearly full.
Australia long has insisted the problem is a regional one that must have a regional solution, such as the deal with Malaysia. The Canberra government said if would-be asylum seekers know they will be sent to Malaysia rather than be processed in Australia, they won't try to make the journey.
Under the so-called Malaysia solution, they could be sent to Kuala Lumpur after only 72 hours from the time of being picked by Australian maritime authorities.
"This will smash the people smugglers' business model," Gillard said on national television.
The agreement was criticized by opposition leader Tony Abbott.
"This Malaysian deal is another betrayal by the prime minister," he said. "She said adamantly that no boat people would be sent to countries that haven't signed the U.N. refugee convention."
While the past several years has seen mounting concern in Australia about the increasing number of boat people, there has also be arguments about what to do with them.
Abbott's criticism is that of many human rights activists who express concern about the boat people's fate in Malaysia.
Australian Immigration Minister Chris Bowen said tough negotiations with the U.N. High Commissioner for Refugees will ensure human rights protections for the boat people.
''People will have the right to work," he said after the signing. "If for whatever reason they can't find work, then some appropriate case-by-case elements will be put in place … limited in its scope, basic and modest.''
Bowen dismissed criticism that the right-to-work in Malaysia would encourage asylum seekers to take boat journeys to Australia just so they would be sent to Malaysia.
''Critics may say asylum seekers transferred from Australia to Malaysia are getting too good a deal. On the other side, people may say the arrangements aren't strong enough. We've struck a good balance that ensures appropriate protections,'' he said.
Malaysian Home Affairs Minister Hishammuddin Hussein said Malaysia is committed to treating the new arrivals with dignity. People smuggling is a "vile trade" and "the UNHCR will be there to monitor and safeguard the standards that we have set,'' he said.
Gillard backed up Malaysia's claim that the boat people would be treated according to international standards and not be subject to penalties imposed on illegal entrants to that country.
''This means they will not be arrested and they will not be caned,'' she said.
''Those sent to Malaysia will be treated with dignity and respect, in accordance with human rights. That's a clear commitment of the Malaysian government as part of this agreement.''
Australia also will fund schooling for children and health costs but these will involve the use of existing basic facilities in Malaysia. Malaysia's new processing centers would be accommodation-style buildings and not the more basic detention centers as found in Australia.
The Gillard government has been negotiating a similar agreement with Papua New Guinea.