Australian Prime Minister Julia Gillard made the announcement in anticipation of the Lower House passing amendments to the Immigration Act this week that would allow the creation of the offshore processing centers, a report by The Age newspaper said.
The proposed changes would allow the transfer of asylum seekers in centers, including the main one on Christmas Island in the Indian Ocean, around 1,600 miles from the western Australian city of Perth.
Australia also would be allowed, under the proposed changes, to hold asylum seekers indefinitely while identification and refugee status us being established, The Age reported.
"Subject to what those reconnaissance teams find, it would be possible for the Defense Force to facilitate the construction of temporary facilities in both locations," Gillard said. "That means within a month, we would hope to see people being processed in Nauru and PNG."
The move would mark the return of Australian immigration officials to the two countries, which previously had centers operated by Australia.
Nauru, in the South Pacific, has a population of just more than 9,000 and is under the protection of Australia, although it has been independent since 1968. The almost circular island is noted for its phosphate mines, now exhausted.
From 2001-08, Nauru accepted aid from Australian in exchange for housing a refugee center.
PNG, with a population of fewer than 7 million, lies off the northern tip of Australia and has had close relations with Australia, which governed it until independence in 1975.
PNG's rugged, jungle-covered Manus Island off its northern coast covers 800 square miles and has a population of 43,000, a 2002 census indicated. Its Australian-operated asylum center ran from 2001-04.
Gillard's announcement of a return to the islands is the latest twist in the decade-long problem of what to with thousands of Asian and Middle Eastern asylum seekers arriving by boats.
Many arrive from Afghanistan, Sri Lanka and Iraq and often have paid thousands of dollars to people smugglers for the dangerous passage often in unseaworthy vessels.
But Gillard defended her get-tough policy, saying it levels the playing field for all asylum seekers, The New Age report said.
Gillard couldn't say how long arrivals who are given refugee status might wait under the policy for a visa. However, they should have ''no advantage'' over asylum seekers waiting in other countries, the New Age report said.
Keeping refugees waiting for a visa was ''fundamental" to the propositions in the recent Houston report -- "you don't get an advantage because you've got on a boat."
Among the recommendations in the report by former defense chief Angus Houston is reopening of offshore processing centers in Nauru and PNG and no fast-tracking of asylum seekers simply because they arrive by boat.
The report also recommended that Australia's humanitarian refugee intake be increased from 13,750 to 20,000 a year.
Around 1,800 arrived by boats last month, the government said.
The government is in talks with Nauru and PNG about the setting up the centers.
However, a report by Radio Australia said there is concern by some PNG politicians about re-establishing a center.
Powes Parkop, the governor of PNG's National Capital District, said the country's laws shouldn't be overlooked just to cooperate with a close neighbor.
Parkop said in principle he isn't against PNG having a center.
"My understanding is that these asylum-seekers will be going to a center where they'll be under guard, locked up and detained like processing centers in Australia," Parkop said. "That isn't legal here because it's against our constitution."
He said it's the culture of PNG to give refugees more freedom.
"When the West Papuans (illegal immigrants from Indonesia) come to PNG, we put them in refugee camps, where they're free to go fishing and gardening and fend for themselves, while we process them," he said.
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