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Lawyers representing more than 850 asylum seekers detained in the Manus Island in Papua New Guinea have said they will start legal proceedings seeking billions in compensation from Australia.

Papua new Guinea's government this week ordered the closure of the controversial detention camp operated by Australia after the supreme court ruled the detention of asylum seekers was illegal.

"We can go straight to assessing reasonable compensation without having to prolong the case any further," lawyer Ben Lomai said, according to Reuters.

Lomai said Australia is bound to pay for the cost including those for maintaining the offshore centre and for the wellbeing of the asylum seekers, which would potentially amount to billions of dollars.

"In my view that should also include any other costs such as the legal costs - compensation claims, etc. If we get the order for compensation we will be looking at an order to enforce that against the Australian government," he said.

Australia refused to budge after PNG ordered the closure of the centre, saying it will not allow "people smugglers to get back into business.'

Australia has followed a tough policy against illegal asylum seekers and hundreds of people who reached its shores as refugees are held in detention centers it operates in Papua New Guinea and the pacific island of Nauru.

Most of the refugees are from various Southeast Asian countries and from the Middle East, and they set sail from Indonesian ports in rickety boats.

On Thursday, Australian Prime Minister Malcolm Turnbull said there was no need to turn "misty-eyed" over immigration, saying Australia has prevented thousands of migrants from drowning in sea.

Besides the Manus Island camp, Australia operates another centre in Nauru, where it has kept more than 500 asylum seekers. There have been allegations of human rights violations in both places. A young Iranian refugee set himself on fire at the Nauru detention camp this week.

Australia's tough immigration law adopted in 2001 stipulates that illegal migrants intercepted trying to reach the country by boat are sent to camps in Nauru or Papua New Guinea and will never be eligible to be settled in Australia.

While Australia has categorically refused to resettle the refugees in its land, Papua New Guinea is willing to let the asylum seekers stay on in the country.

However, most of the refugees insist on being allowed to settle in Australia and shun poorer nations. Some are willing to be flown back to their native countries.

"It is clear that several of these refugees do not want to settle in Papua New Guinea and that is their decision," PNG Prime Minister Peter O'Neill said.

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