Australia will deport all asylum seekers who arrive on its shores to Papua New Guinea, Prime Minister Kevin Rudd has warned.
The "very hard line" move is an attempt to deal with the increasing number of asylum seekers who travel to Australia in rickety fishing boats.
The influx has become a significant political issue for Mr Rudd and his announcement comes just months ahead of an election his Labor Party is widely expected to lose.
Unveiling the policy Mr Rudd, who ousted Julia Gillard last month, said: "From now on, any asylum seeker who arrives in Australia by boat will have no chance of being settled in Australia as refugees."
Mr Rudd and Papua New Guinea Prime Minister Peter O'Neill signed an agreement in Brisbane on Friday that will enable Australia to deport asylum seekers to its developing neighbour.
By Friday, 15,728 asylum seekers had arrived in Australia by boat. The arrivals are on track to exceed last year's total of 17,202.
On Tuesday, a boat carrying 150 asylum seekers capsized off the country's Christmas Islands, leaving four dead.
Papua New Guinea has not set a limit on the number of asylum seekersThe largest number of asylum seekers come from Iran, last year accounting for one in seven arrivals and this year for one in three.
Afghanistan, Sri Lanka, Pakistan, Vietnam, Iraq, Bangladesh and Burma are the next largest sources of asylum seekers arriving on Australian shores.
Papua New Guinea's prime minister has put no limit on the number of people it will accept.
Australia is the island nation's former colonial master and is now its largest source of foreign aid.
In return for accepting those bound for Australia, Mr Rudd said Australia would redevelop a hospital in Papua New Guinea's second largest city and reform the country's university sector.
Mr Rudd's policy has been condemned by human rights advocates.
Amnesty International's refugee campaign co-ordinator for Australia, Graeme McGregor, said: "The new plans to resettle all asylum seekers that are found to be refugees in PNG shows not only a complete disregard for asylum seekers but absolute contempt for legal and moral obligations."
David Manne, executive director of Australia's Refugee and Immigration Legal Centre, described it as "a fundamental repudiation of our commitment to protecting refugees".
He described Papua New Guinea as an unsafe country where violence is widespread and serious human rights abuses were a daily occurrence.
However, the deportation policy is likely to be popular with voters and is Mr Rudd's second eye-catching policy announcement in a week.
On Tuesday, he pledged to transform the deeply unpopular carbon tax a year ahead of schedule in a bid to cut household costs.
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