Papua New Guinea has ordered the shutting down of the Manus island detention camp run by Australia where it has detained hundreds of asylum seekers.
Prime Minister Peter O'Neill issued the order for closing the centre -- which is called by critics Australia's Guantanamo Bay -- after his country's supreme court ruled on Tuesday the detention of hundreds of asylum seekers in Manus island is illegal.
However, Australian Immigration Minister Peter Dutton said the government's immigration policy will stay unchanged, refusing to resettle more than 800 asylum seekers in Australia.
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.
These people set sail from Indonesian ports and are from various southeast Asian countries and from the Middle East, as well as from other nations such as Sri Lanka, Afghanistan and Iran.
"Respecting this ruling, Papua New Guinea will immediately ask the Australian government to make alternative arrangements for the asylum seekers currently held at the Regional Processing Centre," Prime Minister Peter O'Neill said on Wednesday.
The Papua New Guinea supreme court said in its ruling that the constitutional right to freedom of 850 people held in Manus Island was breached by Australia's action.
Australia has been negotiating with a host of countries over resettling the refugees but the effort has seen little success.
O'Neill said Australia must make arrangements for the resettling of the asylum seekers but added that they would be free to be settled in Papua New Guinea if they wanted.
However, the refugees, some of whom are kept behind razor wires in the camps, refuse to be settled in poor nations such as Papua New Guinea.
"It is clear that several of these refugees do not want to settle in Papua New Guinea and that is their decision," O'Neill said in a statement, hinting at the impasse.
Immigration policy is a key political issue in Australia, where Prime Minister Malcolm Turnbull declared early elections will be held in July.
Dutton stressed that the Papua New Guinea government's decision hasn't changed anything for Australia.
"The (Australian) government has not resiled from its position that people who have attempted to come illegally by boat to Australia and who are now in the Manus facility will not be settled in Australia," Dutton said in a statement.
However, observers believe immigration policy will remain a sensitive issue in the upcoming elections.
Australia will be forced to relocate the detention centre to another Pacific island or move the immigrants to the centres it operates in Nauru.
Citing rights lawyers representing the immigrants, Reuters reported that nearly all the Manus Island want to be settled in Australia and they will demand a compensation for the illegal custody.
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.